National Pension Scheme

Pension is a fund filled by an individual for a long time. During retirement it can be tapped in to for a regular steady income. The National Pension Scheme is an initiative taken by the Government of India to allow every citizen to gain from a pension account.

It is accumulated over time with a 10% contribution from the individual’s basic salary. It is made mandatory for all government employees, however, the private sector employees can choose between the Employee Provident Fund (EPF) or NPS

1. Risk Appetite –  There is moderate risk involved.
2. Returns – Interest is not guaranteed
3. Taxability – In Tier II accounts have no tax benefits, while Tier I accounts can claim exemptions under Section 80(C) and 80[CCD(1B)]
4. Lock-in period – longest lock-in as it can be withdrawn on after the age of 60 years
5. Withdrawals –  after 3 years withdrawals are allowed for predefined purposes
6. Investment Safety –  Portions are invested in equities which pose a certain amount risk
7. Inflation Cover – The returns are linked to the market (equities) so there is a substantial protection against inflation