The national pension system (NPS) is a defined contribution retirement plan. The primary objective is enabling systematic savings during the working life of the subscribers. The aim is to provide retirees with an option to achieve financial stability during their golden years.
Benefits of the National Pension System (NPS) are:
It is transparent - NPS is transparent and cost effective system wherein the pension contributions are invested in the pension fund schemes and the employee will be able to know the value of the investment on day to day basis.
It is simple - All the subscriber has to do, is to open an account with his/her nodal office and get a Permanent Retirement Account Number (PRAN).
It is portable - Each employee is identified by a unique number and has a separate PRAN which is portable i.e., will remain same even if an employee gets transferred to any other office.
Individuals contributing to NPS would enjoy tax benefits on their contributions as under:
- Tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of 1.5 Lakh under Sec 80 CCE
- NPS also reduces your tax liability by an additional deduction of 50,000/- under section 80CCD (1B) p.a. (applicable from FY 2015-16 and onwards)
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