The National Pension System (NPS) offers numerous benefits for those looking to secure their retirement.
Managed by the central government, NPS is a social scheme designed to provide account holders with a pension fund and annuity. You can contribute to your NPS account until you turn 60 years old.
Withdrawal Benefits
Under the NPS scheme, you can withdraw 60% of the accumulated amount as a lump sum, while the remaining 40% is used to purchase an annuity,
providing a steady income post-retirement. This structure ensures you receive both a lump sum and a regular pension.
Additional Benefits of NPS
Besides the retirement fund, investing in NPS offers several other benefits:
Tax Benefits: Investors can avail of tax deductions up to Rs 1.50 lakh under Income Tax section 80CCD(1). Additionally, there is an extra tax rebate of Rs 50,000 available under section 80CCD(1B).
Employer Contribution: Employees can benefit from their employer’s contribution. If an individual invests 10% of their basic salary and DA into NPS,
they receive separate tax exemptions from the employer. For government employees, this limit is set at 14%.
Partial Withdrawals: NPS allows partial withdrawals before retirement. Account holders can withdraw up to 25% of the total deposit amount, provided the account is at least 3 years old.
Flexibility and Control: NPS offers great flexibility. Account holders can contribute to the fund anytime during the financial year.
They can also choose and change their investment options as needed and manage their account online.
By investing in NPS, you not only secure a retirement fund but also enjoy tax benefits, partial withdrawal options, and significant flexibility in managing your investments.
