The National Pension System (NPS) is a voluntary, longterm retirement savings scheme initiated by the Government of India. It was launched in 2004 to provide retirement income to Indian citizens. NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and is open to public, private, and unorganised employees.

Here are the key features of the National Pension System (NPS):

• Voluntary Participation: NPS is open to all Indian citizens aged 18 to 65, including salaried employees, selfemployed individuals, and nonresident Indians (NRIs). Participation is voluntary, and individuals can join the scheme independently.
• Two Tiers: NPS operates in two tiers – Tier I and Tier II. Tier I is the mandatory pension account that has specific restrictions on withdrawals and offers tax benefits. Tier II is an optional account that allows more withdrawal flexibility but doesn't offer the same tax benefits as Tier I.
• Individual Accounts: Each participant has an individual NPS account linked to their Permanent Retirement Account Number (PRAN). PRAN is a unique identification number assigned to each subscriber and remains the same throughout the individual's life.
• Contributions: Subscribers regularly contribute to their NPS accounts during their working years. These contributions accumulate and grow over time to provide a retirement corpus. Contributions can be made either as a lump sum or through regular instalments.
• Choice of Investment: NPS offers multiple investment options, known as Asset Classes, including equity, government securities, corporate bonds, and alternative investment funds. Subscribers can choose their investment preferences based on risk tolerance and retirement goals.
• Auto Choice: NPS offers an "Auto Choice" option for those who do not wish to manage their investment portfolio actively. In this option, the investment mix changes automatically based on the subscriber's age, gradually shifting from higherrisk investments to more conservative ones as retirement approaches.
• Tax Benefits: Contributions made to the Tier I account of NPS are eligible for tax deductions under Section 80CCD(1) of the Income Tax Act, subject to certain limits. An exclusive deduction of up to Rs. 50,000 is available under Section 80CCD(1B).
• Withdrawals: In Tier I, withdrawals are restricted and are generally allowed only after the subscriber reaches the age of 60. A partial withdrawal is permitted under certain conditions, such as for specific financial needs or medical treatment. A portion of the corpus must be used to purchase an annuity that provides a regular income during retirement.
• Portability: NPS is portable across jobs and locations, allowing subscribers to continue their account even if they change employers or move to different cities.

The National Pension System aims to provide individuals with a systematic and disciplined way of saving for retirement. It offers a range of investment options, tax benefits, and the flexibility to customise investment strategies according to individual preferences. If you're considering joining the NPS, it's advisable to understand the various features, investment choices, and withdrawal rules to make the most of this retirement savings scheme.

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