New Pension System or NPS is a voluntary, defined contribution pension scheme* introduced by the Pension Fund Regulatory and Development Authority (PFRDA). PFRDA is a government body which aims to serve the old age income needs of people.
Under this scheme, you can regularly set aside a certain amount during your working years to secure your post retirement needs like living expenses, medical costs, etc. These savings will continue to increase, depending on the returns earned over the years.
At the time of retirement, you can use this accumulated pension kitty for purchasing a Life Annuity# from a life insurance company. You also have the option to withdraw a part** of your wealth as lump-sum, depending on your age.
To open an NPS account and start saving for your retirement, you can contact any of the Points of Presence (POPs) appointed by PFRDA. To enroll in this scheme, you can go to PFRDA’s website, www.pfrda.org.in and access the NPS offer document containing the application form and other information about the scheme. Details of POPs, Pension Fund Managers and other details are also available on this website.
**For ages 60 and above, at least 40% of the accumulated pension wealth needs to be utilized for purchase of annuity. For ages below 60, at least 80% of the accumulated pension wealth needs to be utilized for purchase of annuity.
#Life Annuity is a form of insurance that provides you regular annual income for life.