National Pension Scheme
NPS is a voluntary contributory pension scheme introduced by the Central Government through Pension Fund Regulatory and Development Authority (PFRDA) to promote old age income security. NPS is an easily accessible, low cost, tax-efficient, flexible and portable retirement savings account.
How NPS works?
- Under NPS, individual contributes to his retirement account for his social security and financial independence.
- FNPS investment made by individual is pooled in pension fund.
- These fund are invested by PFRDA regulated pension fund managers in diversified portfolio comprising of equity, corporate bonds, and government securities.
- These investments would grow and accumulate over years, depending on returns generated and time horizon of investment.
- At the time of normal exit from NPS, subscriber may use at least 40% of accumulated retirement wealth to purchase annuity from PFRDA empanelled annuity service providers and withdraw remaining accumulated wealth as lump sum amount.