National Pension System(NPS)

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What is NPS ( National Pension System )?

National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable subscribers to make optimum decisions regarding their future through systematic savings during their working life.

Under the NPS, individual savings are pooled into a pension fund which is invested by PFRDA-regulated professional fund managers into diversified portfolios comprising of government bonds, bills, corporate debentures, and shares. These contributions grow and accumulate over the years, depending on the returns earned on the investment made.

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Features & Benefits of NPS:

  • A safe retirement fund: Introduced by the Government of India and regulated by the Pension Fund Regulatory & Development Authority (PFRDA).

  • Simple: Opening an account with NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number that remains with the subscriber throughout his lifetime.

  • Portable: NPS provides seamless portability across jobs and locations, unlike all current pension plans, including that of the EPFO. It would provide a hassle-free arrangement for individual subscribers.

  • Flexible: NPS offers a range of investment options and choices of Pension Fund Managers (PFMs) for planning the growth of your investments. Individuals can switch over from one investment option to another or from one fund manager to another subject to conditions.

Who can Join NPS?

  • Citizen of India; Resident or Non-Resident,

  • Age between 18-65 years, as of the date of joining,

  • Salaried or Self Employed.

Tax benefits for Individuals (All Citizen Model)

  • A self-employed individual is eligible for a tax deduction of up to 20% of Gross Income under section 80CCD (1) of the Income Tax Act, 1961 within the Rs.1.5 Lacs limit under section 80CCE.

  • An additional investment of Rs.50,000 will be eligible for tax deduction under section 80CCD (1B) of the Income Tax Act, 1961. This is over and above Rs. 1.5 lacs limit under section 80CCE.

Tax benefits for Salaried Individuals (Corporate Model):

A contribution made by Employee: A salaried individual is eligible for a tax deduction of up to 10% of Salary (Basic + Dearness Allowance) under section 80CCD (1) of the Income Tax Act, 1961 within Rs.1.5 Lacs limit under section 80CCE. An additional investment of Rs.50,000 will be eligible for tax deduction under section 80CCD (1B) of the Income Tax Act, 1961. This is over and above Rs. 1.5 lacs limit under section 80CCE.

A contribution made by Employer: The employee is eligible to claim a tax deduction on the employer’s contribution up to 10% of salary (Basic + Dearness Allowance) under section 80CCD(2) of IT Act. This is over and above of Rs. 1.50 lac limit available under section 80CCE. There is no upper cap in terms of absolute value on employer contribution.

Tax benefits for Corporate: Corporate can claim tax benefits for the amount contributed towards the pension of employees. Up to 10% of the salary (basic and dearness allowance) of employers' contribution can be deducted as ‘Business Expense’ from the Corporates Profit & Loss Account as per section 36(1)(iv)(a) of the IT Act.

Types of Accounts: Under NPS account there are two types of accounts – Tier I & Tier II.

Tier I is the Individual Pension Account, which is the default pension account having all the tax incentives under the Income Tax Act.

Tier-II is an optional investment account available to a subscriber having an active Tier-I account. This account has no withdrawal restrictions and tax benefits. Tier II is not a Pension Account.


Tier – I Tier – II
Individual Pension Account Optional Account – Require an active Tier-I
Withdrawal as per rules/regulations only Unrestricted withdrawals
Min. Contribution to open Rs. 500 Min. Contribution to open Rs. 1000
Min. Contribution per year Rs. 1000 Min. Contribution Rs. 250
Tax benefits are available No tax benefits on contributions/gains

How to Invest in The National Pension Scheme(NPS) 2021Image result for Retirement Pension


A subscriber can make any number of contributions to his/her Tier-I or Tier-II account without any upper limit of amount through any of the following modes:

i. Physical mode – by visiting any of the registered service providers (PoP) and depositing cheques/cash along with the NPS contribution slip.

Cheque name accepted only  "Religare Broking Ltd Collection A/c NPS- NPS Trust”

ii. Online mode -

 a.   Web-based [(i) log in to Pension Account (ii) online facility provided by PoPs (iii) eNPS platform of NPS Trust]

b.   NPS Mobile Application login

The contributions made by the subscriber will get invested as per the subscriber's choice (Pension Fund and Asset allocation) exercised and recorded with CRA.

Investment choices:

The NPS contributions made by a subscriber will get invested as per the subscriber choices (Pension Fund and Asset allocation) exercised and recorded with CRA.

The following choices are available to the subscribers:

 (A) Selection of Pension Funds:

The subscriber can choose any one of the Pension Funds registered with PFRDA. To see the list of Pension Funds registered with PFRDA please click here.

 (B) Investment Choice for Asset Allocation:

The contributions of subscribers are invested by the Pension Funds (chosen by the subscriber) in compliance with the investment guidelines prescribed by PFRDA

for each Asset Class i.e. Equity, Corporate Bonds, Government Securities, and Alternate Assets.

An NPS subscriber has the freedom to allocate his/her contributions to different Asset Classes through Active Choice or Auto Choice

 Active Choice:  Subscriber actively decides on the allocation of funds across:

Asset class E or Equity up to a maximum of 75%

Asset Class C or Corporate Bonds upto a maximum of 100%

Asset Class G or Government Securities up to a maximum of 100%

Asset Class A or Alternate Assets up to a maximum of 5%


Auto Choice: The funds of the subscriber get invested across three asset classes (Equity, Corporate Bonds & Government Securities) in pre-determined proportion as per the age of the subscriber. The initial allocation across three asset classes remains constant till 35 years of age and thereafter allocation to equity gradually declines every year. 

 Age Aggresive Life Cycle Fund (LC-75) Moderate Life Cycle Fund (LC-50) Conservative Life Cycle Fund (LC-25)
Asset Class (%) Asset Class (%) Asset Class(%)
Upto 35 years 75 10 15 50 30 20 25 45 30
Upto 36 years 71 11 18 48 29 23 24 43 33
Upto 37 years 67 12 21 46 28 26 23 41 36
Upto 38 years 63 13 24 44 27 29 22 39 39
Upto 39 years 59 14 27 42 26 32 21 37 42
Upto 40 years 55 15 30 40 25 35 20 35 45
Upto 41 years 51 16 33 38 24 38 19 33 48
Upto 42 years 47 17 36 36 23 41 18 31 51
Upto 43 years 43 18 39 34 22 44 17 29 54
Upto 44 years 39 19 42 32 21 47 16 27 57
Upto 45 years 35 20 45 30 20 50 15 25 60
Upto 46 years 32 20 48 28 19 53 14 23 63
Upto 47 years 29 20 51 26 18 56 13 21 66
Upto 48 years 26 20 54 24 17 59 12 19 69
Upto 49 years 23 20 57 22 16 62 11 17 72
Upto 50 years 20 20 60 20 15 65 10 15 75
Upto 51 years 19 18 63 18 14 68 9 13 78
Upto 52 years 18 16 66 16 13 71 8 11 81
Upto 53 years 17 14 69 14 12 74 7 9 84
Upto 54 years 16 12 72 12 11 77 6 7 87
Upto 55 years 15 10 75 10 10 80 5 5 90

 Following are the 03 Life Cycle Funds:

  i.  Conservative Life Cycle Fund (LC25)

  ii.  Moderate Life Cycle Fund (LC50) – Default

  iii.  Aggressive Life Cycle Fund (LC75)

Exit from National Pension System (NPS)

A subscriber can exit from National Pension System (NPS) only in accordance with PFRDA (Exits and Withdrawals under NPS) Regulations, 2015 which are notified on 11th May 2015.  The said regulation is a comprehensive document giving details of all the benefits that can be withdrawn under the National Pension System and the applicable conditions thereof.   The said regulation is available on our website at

Online Withdrawal Process for NDSL

 For detailed investment guidelines refer to the Circular Section of PFRDA website 

Retired life ka sahara, NPS hamara