NPS offers returns ranging from 9% to 12% CAGR, aligning with large-cap mutual funds and surpassing both PPF at 7.1% and EPF at 8.15%. Celebrated annually on October 1, NPS Diwas promotes retirement planning under the Pension Fund Regulatory and Development Authority (PFRDA).
The PFRDA, established under the 2013 Act, regulates the National Pension System, benefiting government and private sector employees. It focuses on the structured growth of the pension market, ensuring financial stability for retirees.
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NPS includes Tier I and Tier II accounts. Tier I requires a minimum deposit of ₹500, is locked until age 60, and allows 60% withdrawal at maturity. The remaining funds must buy an annuity. Tier II, a voluntary account, requires a minimum of ₹250 and complements Tier I.
Indian citizens aged 18 to 70 can open an NPS account, enjoying tax benefits such as deductions up to ₹1.5 lakh under Section 80 CCE and an additional ₹50,000 under Section 80 CCD(1B).
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Recent changes include the introduction of the Unified Pension Scheme (UPS) from April 2025, providing options alongside NPS for central government employees. It mimics the Old Pension Scheme with benefits like a family pension and lump sum payouts.
UPS guarantees a pension of 50% of the employee’s last salary and a minimum pension of ₹10,000 monthly after 10 years of service. It adjusts for inflation, ensuring that retirees maintain purchasing power in their later years.
