National Pension System (NPS)

The NPS scheme is applicable to all recruits joining the Central Government service (except armed forces) from April 1, 2004. Subsequently, many States also adopted this NPS system.

NPS is a “defined contribution” scheme. Throughout the career of the employee, a monthly contribution (partly by the government and partly deducted from the salary of a working employee) is made.

NPS operates on a 'defined contribution' model where subscribers fund their accounts. However, there's no guaranteed payout upon exiting, as the accumulated wealth hinges on contributions and investment returns.

Resident (Central government employees, State government employees, corporate sector employees and unorganised workers) as well as non-resident Indians in the age group of 18-60 years (as on the date of submission of NPS application) can invest.

The returns being market-linked is a basic design feature of the NPS.  The funds are invested in earmarked investment schemesthrough Pension Fund Managers with asset allocation across various asset classes (Equity, Corporate Bond, Government Securities).