How the National Pension System can help you prepare for retirement

The National Pension System (NPS) is a pension scheme for individuals in India. It offers a market-linked investment option with the flexibility to choose from various investment options and the ability to withdraw a portion of the accumulated savings before retirement.

Some of the key benefits of the NPS include:

1. Market-linked returns: The NPS invests in a diversified portfolio of stocks and bonds, which offers the potential for higher returns over the long-term.

2. Investment flexibility: Individuals can choose from various investment options, including equity, government bonds, and corporate bonds, depending on their personal risk tolerance.

3. Partial withdrawal: The NPS allows individuals to make partial withdrawals for specific purposes, such as higher education or buying a home, before retirement.

4. Tax benefits: Contributions to the NPS are eligible for tax deductions under Section 80C of the Income Tax Act, up to a limit of INR 1.5 lakh per financial year. Additionally, a portion of the accumulated savings can be withdrawn tax-free at the time of retirement.

5. Annuity option: At the time of retirement, individuals have the option to purchase an annuity, which provides a steady stream of income during their retirement years.

Overall, the NPS is a good option for individuals who are looking for a market-linked investment option with the flexibility to choose from various investment options and the ability to make partial withdrawals before retirement.