The National Pension System (NPS) is a small savings scheme for retirement in which one can invest up to the age of 70. It is open to all citizens, whether employed or self-employed or resident or non-resident Indians. The Pension Fund Regulatory and Development Authority (PFRDA), which regulates NPS, has recently made several changes to the pension scheme to make it accessible to more people and promote it as the best savings scheme for retirement.

Here are six reasons why you cannot ignore NPS:

Affordable Product:

NPS is a low-cost investment vehicle for retirement. It is also a simple retirement product with defined benefits, open to people aged 18 to 70. From a cost perspective, it is the most affordable product compared to mutual funds.

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Good Returns:

NPS’s one-year return was 35.7 per cent, while its 10-year return was around 14 per cent, a feat that only six pension fund managers could achieve for this period. Additionally, the product’s low cost makes it rewarding.

Tax Benefits:

NPS provides an additional tax benefit of Rs 50,000 under section 80 CCD (1b) of the Income-tax Act over and above the Rs 1.5 lakh limit under section 80C in the old tax regime in a financial year. This deduction will provide a relief of around Rs 15,600 for those in the 30 per cent tax slab. However, tax saving is only one of the many benefits of NPS.

Also Read: How To Open An NPS Account?

Flexible Deposit &Withdrawal Rules:

The minimum contribution is Rs 500, and the minimum deposit amount in a financial year is Rs 1,000. After retirement, subscribers can withdraw 60 per cent of the funds in a lump sum or systematically at their preferred frequency. NPS also provides auto and active investment modes.

Subscribers also have the option to continue investing until the age of 70 or stay invested until 75. They also have a partial withdrawal facility for urgent cash needs for medical treatment, marriage, children’s education, and house purchase or construction.

Choice of Pension Fund Managers:

Investors can select more than one pension fund manager for equity, government securities, and corporate bonds investments. Additionally, they can change their asset allocations four times a year without attracting capital gain tax.

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Convenience& Portability:

One can open an NPS account offline via points of presence (POPs) like banks, post offices, etc., or online through the central recordkeeping agencies (CRAs). After opening the account, each subscriber gets a unique 12-digit permanent retirement account number (PRAN) for identification. The account can be ported from one service provider to another when changing jobs or other situations. However, the PRAN remains the same.

The government launched the NPS scheme on January 1, 2004, initially for government employees, but it opened it for all citizens on May 1, 2009.