New Delhi | Jagran News Desk: The National Pension System (NPS) is a government-run investment scheme. The subscribers can apply for an NPS account either by visiting Point of Presence (PoP) or can do so online by visiting the e-NPS website. The NPS was started for government employees in 2004. However, in 2009, NPS was made accessible to the general public.

The National Pension System has two types of accounts - Tier 1 and Tier 2. While the Tier 1 account is a pension account, the Tier 2 account is the investment account.

How to invest in the National Pension System

There are three ways to invest in the NPS - 1.) Equity; 2.) Corporate Bond; 3.) Government securities. Investors are given two options to select their investment - asset allocation and auto select. The auto choice initially accounts for 50 per cent of the equity and decreases over time, while in asset allocation, an investor can invest up to 75 per cent in equity.

Five benefits of the National Pension System

Voluntary Contribution: In NPS, a customer can contribute at any time in a financial year and change the amount he wants to keep aside and save every year.

Flexibility: NPS gives flexibility to its subscribers, who can choose their own investment options and pension funds.

Portable: Members can operate their NPS account from anywhere, whether they change city or employment.

Regulated by PFRDA: The NPS is regulated by PFRDA with transparent investment norms and regular monitoring and performance review of fund managers by NPS trusts.

Income Tax Benefit: A person who is a subscriber of NPS can claim tax deduction up to 10 percent on the gross income of Rs 1.5 lakh under Section 80C of the Income Tax (I-T) Act. NPS is managed just like a mutual fund and one can expect very good returns from it.

Posted By: Shashikant Sharma