National Pension Scheme
(Ministry of Finance)
Key features of the Campaign
Main Features of The National Pension Scheme
- The National Pension System (NPS) is a voluntary defined contribution pension system in India.
- National Pension Scheme was launched on 1st January 2004 with the objective of providing retirement income to all the citizens.
- It is a pension cum investment scheme launched to provide old age security to citizens.
- NPS aims to institute pension reforms and
- to inculcate the habit of saving for retirement amongst the citizens.
- Any individual citizen of India (both resident and Non-resident) in the age group of 18-6o years can join NPS.
The scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA).
The scheme was initially designed for government employees only, it was opened up for all citizens of India between the age of 18 and 60 in 2009.
The employee of the various sectors contributes towards pension from monthly salary along with matching contribution from the employer (central government/state govt/corporate).
Withdrawal of the scheme
After retirement or exit from the scheme, the corpus is made available with the mandate that some portion of the corpus must be invested into an annuity to provide a monthly pension post retirement or exit from the scheme.
- Entire corpus (principal sum) escapes tax at maturity and entire pension withdrawal amount is tax-free.
- On 10 December 2018, Government of India made NPS an entirely tax-free instrument in India where entire corpus escapes tax at maturity, the 40% annuity also became tax-free.