National Pension System

A retirement scheme regulated by the PFRDA, with a long lock-in.

The National Pension System is a government-regulated retirement scheme administered under the PFRDA. Contributions are allocated between equity, corporate debt, government securities and alternative assets, either through an active choice or an age-based auto choice.

Tier I is the retirement account with withdrawal restrictions until the age of sixty and a mandatory annuity purchase at exit. Tier II is a voluntary account with no lock-in but also no additional tax deduction.

Key features

• Tier I retirement account with withdrawal restricted until age sixty
• Tier II voluntary account with liquidity and no separate deduction
• Active and auto asset allocation choices across four asset classes
• Additional deduction under Section 80CCD(1B) in the old tax regime
• Minimum prescribed portion must be used to purchase an annuity at exit
• Pension fund manager can be changed once in a financial year