The National Pension System (NPS) is a voluntary, long-term retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It aims to provide pension benefits to individuals from the age of 60 onwards, ensuring a steady income stream post-retirement.
Types of NPS:
- Tier-I Account: The primary NPS account with strict withdrawal restrictions, designed to provide a pension after retirement.
- Tier-II Account: An optional savings account with more flexibility in withdrawals, allowing investors to withdraw funds as per their financial needs.
Features:
- Flexible Contributions: Investors can contribute regularly towards their NPS account, either through monthly installments or lump sum payments.
- Multiple Investment Options: NPS offers a choice of investment options, including Equity, Corporate Bonds, and Government Securities, allowing investors to tailor their portfolio according to their risk appetite and investment goals.
- Tax Benefits: Contributions made towards NPS qualify for tax deductions under Section 80CCD(1) of the Income Tax Act, providing investors with additional tax savings.
- Portability: NPS accounts are portable across jobs and locations, ensuring continuity of investments even if an investor changes employment or location.
- Auto Choice Option: For investors who prefer a hands-off approach, NPS offers the Auto Choice option, where investments are automatically allocated based on the investor\'s age, gradually shifting towards safer assets as retirement approaches.
- Regular Pension Income: Upon retirement, investors can opt for a lump sum withdrawal or choose to receive a regular pension income, providing financial security during retirement years.
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