Investing in the National Pension System (NPS) is a long-term retirement savings option offered by the Government of India. The NPS is designed to provide individuals with a pension income after retirement.

NPS is one of the key investment option for tax saving + wealth creation. It is a voluntary, defined contribution retirement savings scheme, wherein your money is invested by PFRDA regulated professional fund managers. 

Read below to know abut NPS

1. Eligibility: The NPS is open to Indian citizens between the ages of 18 and 65. Both salaried individuals and self-employed individuals can participate in the NPS.

2. Tiered Structure: The NPS has a tiered structure, consisting of two tiers: Tier I and Tier II.

• Tier I: It is the mandatory pension account and has certain restrictions on withdrawal. Contributions to Tier I are eligible for tax benefits under Section 80C of the Income Tax Act, subject to certain limits. Withdrawals from Tier I are allowed only upon reaching the age of 60, with a portion of the corpus mandatorily used to purchase an annuity.

• Tier II: It is an optional investment account that offers more flexibility in terms of withdrawals. Contributions to Tier II do not have tax benefits. However, the funds in Tier II can be withdrawn at any time without any restrictions.

3. Investment Options: The NPS offers two investment choices:

• Active Choice: Under this option, subscribers have the freedom to choose the allocation of their contributions among different asset classes, including equity, corporate bonds, and government securities. This option allows for active management of the investment portfolio.

• Auto Choice: In this option, the investment mix is determined based on the subscriber's age. It starts with a higher allocation to equities in the early years and gradually shifts to safer instruments as the subscriber approaches retirement age.

4. Fund Managers: The NPS allows subscribers to choose from various Pension Fund Managers (PFMs) who manage the investments on their behalf. Each PFM offers different investment strategies and has a track record of performance. It's important to research and choose a PFM based on their expertise, track record, and customer service.

5. Tax Benefits: Contributions made to Tier I of the NPS are eligible for tax benefits under Section 80C of the Income Tax Act, subject to the overall limit. Additionally, an additional tax benefit of up to Rs. 50,000 is available under Section 80CCD(1B) for contributions made to the NPS. However, please note that the tax treatment of the NPS may vary based on individual circumstances and tax laws, so it's advisable to consult with a tax professional.

6. Withdrawal and Annuity: At the time of retirement, a portion of the accumulated corpus in Tier I is mandatorily used to purchase an annuity, which provides a regular pension income. The subscriber has the option to withdraw a portion of the corpus as a lump sum, and the remaining amount is used to purchase the annuity. The proportion of the corpus that can be withdrawn as a lump sum and the annuity rates vary.

7. Portability: The NPS offers portability, allowing subscribers to change jobs or locations without

Before investing in the NPS, it's important to evaluate your retirement goals, risk tolerance, and investment horizon.