18 February 2016
The National Pension System is a defined-contribution pension system operated by the Government of India. In 2004, the Government of India decided to move from a defined-benefit pension system to a defined-contribution pension system. Apart from offering a range of investment options to employees, the scheme allows individuals to make decisions about where their pension fund is invested, permits limited withdrawal prior to retirement and reduces the total pension liabilities of the Government of India. The scheme is structured in two tiers. A tier-1 account is a basic retirement pension account available to all citizens from 1 May 2009. It does not permit withdrawal of funds before retirement. A tier-2 account is a Prospective payment system (PPS) account that permits some withdrawal of pension prior to retirement under exceptional circumstances, usually related to the provision of health care.
NPS is open to all citizens of India between the ages of 18 and 60 on a voluntary basis, It is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life.The employee contribution is fixed at 10% per month which is matched by an employer contribution of the same amount.
Central and state government employees along with Public Sector employees mandatory contributing in National Pension Scheme are restricted from availing any other form of pension scheme initiated by government of India.
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