Pension Scheme: National Pension Scheme (NPS) is a government-sponsored scheme. This plan provides financial security and stability during old age. It ensures that people live with pride and without compromising with their standard of living. Under the NPS scheme, individuals can invest as little as Rs 200 per day to build a retirement corpus. With this, he can get a pension of up to Rs 50,000 per month.

How to apply for NPS scheme?

Individuals need to visit the website of the National Pension System Trust (NPS Trust) to apply for NPS, then register for an NPS account.

Once a person is registered for an NPS account, he/she can start investing in the scheme by choosing a pension fund and investment option. NPS offers two types of investment options: Tier I option and Tier II option.

Tier I option

It is a mandatory account that individuals have to open to take admission in the NPS scheme. This is a long term investment account which cannot be withdrawn before the individual reaches the age of 60 years.

Tier II option

It is a voluntary account that individuals can open in addition to Tier I option. This is a flexible account that allows individuals to withdraw their funds at any time.

Benefits

Tax benefits, flexibility will also be available in the benefits of NPS scheme. Under the NPS scheme, individuals can claim a tax deduction of up to Rs 50,000 per year under section 80CCD(1B) of the Income Tax Act.

They can also claim an additional tax deduction of up to Rs 50,000 per year under section 80CCD(1C) for the contribution made by their employer to the NPS scheme.

Get Rs 50,000 every month:

For example, consider a 25-year-old person who will retire at the age of 60. If he invests Rs 200 per day in the NPS scheme, he can accumulate a retirement corpus of around Rs 50 lakh by the time he reaches the age of 60. Assuming an average annual return of 8 per cent, a person can get a pension of around Rs 50,000 per month after retirement.