New Pension Scheme (NPS): How It Works & Why You Should Invest
20 Mar 2025
New Pension Scheme: What Every Investor Must Know
The New Pension System (NPS), launched by the central government and regulated by the PFRDA, is a defined contribution scheme aimed at ensuring a steady income for subscribers after retirement.
Important features of the NPS
- Open to Indian citizens aged 18–60.
- Two account types: Tier I (retirement-focused, tax benefits, lock-in) and Tier II (flexible savings, no tax benefits).
- Minimum annual contribution of ₹1,000 for Tier I accounts.
- Investments are spread across equity, corporate bonds, government securities, and alternative assets and managed by fund managers.
- Tax exemption up to ₹50,000 under Section 80CCD(1B), in addition to ₹1,50,000 under Section 80C.
Assets Allocation
Investors have two options for asset allocation:
• Active Choice :
Allows investors to allocate funds across Equity (E), Corporate Bonds (C), and Government Securities (G), with a maximum of 50% in Equity.
• Auto Choice :
Automatically adjusts the E-C-G allocation based on the investor’s age through a predefined lifecycle fund.
Leading NPS Tier-I Returns 2025 – Scheme E
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision.
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