NPS

The National Pension System is a voluntary, market-linked retirement scheme regulated by PFRDA and available to every Indian citizen aged 18–70. It was introduced in 2004 for central government new-hires and extended to the general public in 2009. NPS sits between PPF (safe, fixed-return, EEE) and direct equity (volatile, untaxed gains in ELSS) — giving you long-term equity exposure with a low expense ratio of 0.03–0.09%.

NPS has two tiers. Tier 1 is the mandatory, locked-in account; Tier 2 is an optional, open-ended add-on. You can split your contribution across Equity (up to 75% under Active choice), Corporate debt, Government securities, and Alternatives — or hand it off to an Auto LC25/50/75 glide path. Tier 1 employee contribution qualifies for 80C (₹1.5L) plus an exclusive ₹50,000 deduction under 80CCD(1B) — the only route to ₹2 lakh of deductions under the old regime. At age 60, 60% of the corpus is withdrawn tax-free; the remaining 40% must purchase an annuity from an empanelled insurer.

Budget 2025 enabled a version of NPS Vatsalya for children and extended employer contribution (Sec 80CCD(2)) deduction to the new tax regime, making NPS one of the few remaining tax benefits in the new regime for salaried employees.

Project your corpus across different equity allocations, contribution rates, and retirement ages with our NPS calculator.