National Pension Scheme (NPS)

What is the National Pension Scheme?

The National Pension Scheme is a contribution that individuals make to have a regular income after their retirement. It is famously known as the Retirement Savings Plan. Firstly, it was launched for the government employees only in 2004, but later in 2009, it was available for all Indian Citizens. The aim of this scheme is to promote long-term savings in the country.

Key features of the National Pension Scheme

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

• Voluntary Participation: If your age is between 18 to 65, then you can participate in NPS. It is open to all Indian Citizens.
• Flexible Contributions: There is no fixed upper limit amount for the contribution; you can choose the amount you wish.
• Market-Linked Returns: It provides higher returns than the traditional method of investments. Traditional methods, such as FDs, because your contributions are invested in the market.
• Tax Benefits: You will be qualified for the tax deductions if you contribute to NPS. This criterion comes under the Income Tax Act.
• Portability: If you are an employee or relocate frequently, then these NPS accounts are portable across jobs and locations.

Investment Options in NPS

There are various investment options offered by the National Pension System Scheme. Such options can fulfill your financial goals:

• Equity (E): In the equity market, investments offer high returns, but they also carry high risks.
• Corporate Bonds (C): You can invest in corporate debt securities for moderate returns, but the risk is also moderate.
• Government Bonds (G): You can invest in government bonds if you want to take very little risk, but the returns are also low.
• Alternative Investments (A): It involves investments in real estate investment trusts, infrastructure investment trusts, etc. They are only available for a special category of contributors.