National Pension System (NPS)

Why in news?

• Department of Posts starts providing NPS (All Citizen Model) through online mode from April 26, 2022.

About NPS:

• The National Pension System (NPS) is a voluntary defined contribution pension system in India.
• NPS started with the decision of the Government of India to stop defined benefit pensions for all its employees who joined after 1 April 2004.
• While the scheme was initially designed for government employees only, it was opened up for all citizens of India between the age of 18 and 65 in 2009, for OCI card holders and PIO's in 2019.

Regulated By:

• It is administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

Tax exemptions:

• Contributions to NPS receive tax exemptions under Section 80C, Section 80CCC and Section 80CCD(1) of Income Tax Act and NPS is considered one of the best tax saving instruments, after 40% of the corpus was made tax-free at the time of maturity.

PRACTICE QUESTION:

Consider the following statements regarding “National pension system”:

1. It is administered by Pension Fund Regulatory and Development Authority (PFRDA)

2. It is available to central government employees only

Which of the statements given above is/are correct?

(a)1 only

(b)2 only

(c)Both 1 and 2

(d)Neither 1 nor 2

Answer