National Pension scheme, in short NPS, is an investment cum contribution retirement saving scheme designed by the Central Government. The National Pension scheme is for the employees of public, private, and organized sectors. It encourages the employees to make savings while they are working by depositing a certain amount of money and after retirement getting the benefits of the investment done.
The goal of NPS is to encourage people to start saving regularly for their retirement. It is an initiative to find a long-term solution to the problem of providing each Indian with a sufficient retirement income.
This scheme was initially launched in the year 2004. At that time, it was eligible only for the people who served the central government but later in the year 2009, it was made eligible for the people of any sector except for the armed forces. It is based on the unique PRAN (Permanent retirement account number) assigned to each individual upon joining the scheme.
NPS allows employees to contribute regularly to their pension accounts during their employment. When they reach retirement age, they can take a portion of their savings in a lump sum and utilize the remaining balance to purchase an annuity to ensure a steady income in their later years. The following primary goals are carried by NPS:
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