The National Pension System (NPS) is a voluntary defined contribution pension system in India regulated by the Pension Fund Regulatory and Development Authority (PFRDA) which is under the jurisdiction of the Ministry of Finance of the Government of India. It is a retirement benefit scheme introduced by the Government of India to facilitate a regular income post-retirement to all citizens of India. Here are some key features of the National Pension System:
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Defined Contribution: NPS is a defined contribution pension system, which means that the amount of pension you receive after retirement depends on the amount you contribute during your working years.
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Voluntary: NPS is a voluntary scheme, which means that you can choose to join or not join the scheme.
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Long-term Investment: NPS is a long-term investment plan for retirement, and it encourages people to invest in a pension account at regular intervals during the course of their employment.
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Market-Linked: NPS is a market-linked product, which means that the returns on your investment are linked to the performance of the market.
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Permanent Retirement Account Number (PRAN): Under NPS, a unique PRAN is generated and maintained by the Central Recordkeeping Agency (CRA) for individual subscribers.
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Withdrawal: After retirement, the subscribers can take out a certain percentage of the corpus, and the remaining amount is received as a monthly pension post-retirement.
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Different Models: NPS platform offers different models to suit the different segments of users, including the Government model for the Central and State Government Employees, the Corporate Model, and the All Citizens Model.
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Tax Benefits: NPS offers tax benefits to its subscribers. The contributions made towards NPS are eligible for tax deduction under Section 80C of the Income Tax Act, and an additional tax deduction of up to Rs. 50,000 is available under Section 80CCD(1B) .
In summary, the National Pension System is a voluntary defined contribution pension system in India that encourages people to invest in a pension account at regular intervals during the course of their employment. It is a long-term investment plan for retirement, and the returns on investment are linked to the performance of the market. NPS offers tax benefits to its subscribers, and the contributions made towards NPS are eligible for tax deduction under Section 80C of the Income Tax Act.
