National Pension System

The National Pension System (NPS) is a government-sponsored, defined contribution pension scheme in India regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It is mandatory for most central and state government recruits and is voluntary for all citizens aged 18 to 70. NPS allows individuals to contribute regularly during their working life to build a retirement corpus, which can be managed online through the eNPS platform.

Key features of the NPS

Mandatory for government employees:

NPS is compulsory for all central government employees hired on or after January 1, 2004, and has been adopted by most state governments for their employees.

Voluntary for all citizens:

Any Indian citizen between 18 and 70 years old can voluntarily join NPS, including non-residents.

Employer-sponsored model:

Companies can also offer NPS to their employees as a retirement benefit.

Defined contribution:

The scheme is a market-linked defined contribution plan, meaning the retirement income depends on the contributions made and the investment returns.

Online platform:

The eNPS platform allows for easy online registration, contribution, and management of pension accounts.

Investment options:

Subscribers can choose between different investment options, including equity, corporate bonds, and government securities.

Portable:

The pension account can be carried across different jobs and locations.

How it works

Contributions:

Individuals and, if applicable, their employers make regular contributions to an individual pension account.

Investment:

These contributions are invested in various asset classes based on the subscriber's choice.

Retirement:

After retirement, the accumulated corpus can be used to generate a regular income. A portion can be withdrawn, and a mandatory annuity is purchased for the remaining amount.

Regulation and management

The NPS is regulated by the PFRDA. The National Pension System Trust (NPS Trust) was established by the PFRDA to manage and safeguard the assets of the system.

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