The National Pension System (NPS) is a defined contribution retirement plan.
NPS is a pension avenue that enables systematic savings during the working life
of the subscribers and reap the benefit after retirement by withdrawing a part of
the accumulated wealth and the rest invested to purchase an annuity for the investor’s
old age security. Thus bring a financial stability during their golden years.
NPS is regulated by the Pension Fund Regulatory and Development Authority(PFRDA),
created by an Act of the Parliament of India. The NPS started with the decision
of the Government of India to stop defined benefit pensions for all its employees
who joined after 1 January 2004. While the scheme was initially designed for government
employees only, it was opened up for all citizens of India in 2009. Today, the NPS
is readily available and tax efficient under Section 80CCC and Section 80CCD.