National Pension Scheme (NPS)

National Pension Scheme is a scheme launched by the Government of India for Indian Citizens in the age group of 18-60 years. You have to invest in the Pension Plan on a regular basis. This scheme is mandatory for the Central and the State Government employees at the same time it is optional for others.

National Pension Scheme is the best retirement plan when compared to EPF, PPF and Mutual funds. Any non government employee can join this scheme between the age of 18 to 60 years as a individual subscriber or corporate houses can also join NPS. For corporate NPS contribution is in addition to the EPF, PPF, Mutual Fund and other investment. Wipro Technologies was the first Corporate house to subscribe this scheme. Besides individual, corporate houses can also claim tax benefits.

National Pension Scheme (NPS) is regulated by the Pension Funds Regulatory Development Authority (PFRDA).


There are two types of NPS accounts.

Tier I: before attaining the age of 60 years, only 20% of the contribution can be withdrawn. After attaining the age of 60 years, 60% of the contribution can be withdrawn.

Tier II:This is simply a voluntary saving facility. The subscriber is free to withdraw savings from his account at any point of time, but there is no tax benefits with this account.
Swavalamban Scheme or the NPS lite: NPS lite is for economically backward people. This type of account is not covered under social security scheme like Employees' Provident Fund and miscellaneous Provision Act, 1952. The accumulated amount can be withdrawn at any point of time without stating any reason for it.

Multiple investment options (equity, fixed income) called asset classes are there.

E: investments in predominantly Equity market instruments.
G: investment would be in Government securities like Government of India bonds and State Government bonds.
C: investment would be in fixed income securities other than Government Securities or Credit risk-bearing fixed income instruments such liquid funds, corporate debts, fixed deposits.

Before 60 withdraw: you can withdraw 20% of the accumulated amount but need to buy an annuity with with the remaining 80%. The nominee can withdraw the full amount only after the death of the subscriber.

More : Government Welfare Schemes