What is National Pension System (NPS)?

It’s a short form of National Pension System (NPS).  It was introduced by government of India vide Ministry of Finance (Department of Economic Affairs) Notification No. 5/7/2003- ECB & PR dated 22nd December, 2003 to inculcate the habit of saving for retirement amongst the citizens/employees.  

In this model of pension system, the savings of any individual is invested in to a pension fund. These funds are invested by PFRDA (Pension Fund Regulatory & Development Authority) through professional fund managers into various portfolio which is comprising of Government Bonds, Bills, Corporate Debentures and Shares. Basis upon the investment folios, these accumulated funds would grow over the period of time. Opening an account with NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number and it remains with the subscriber throughout his lifetime.  

There are basically three model, under which an individual/employee can open pension account under NPS:

A. All Citizen Model

B. Government Sector:

Employees of:

1. Central Government
2. Central Government Autonomous Bodies (CABs)
3. State Government
4. State Government Autonomous Bodies (SABs)

C. Corporate Sector: 

Employees of:

1. Entities registered under Companies Act 
2. Entities registered under various Co-operative Acts 
3. Central Public Sector Enterprises 
4. State Public Sector Enterprises 
5. Registered Partnership firm 
6. Registered Limited Liability Partnership (LLPs) 
7. Any Body incorporated under any act of Parliament or State legislature or by order of Central / State Government 
8. Proprietorship Concern 
9. Trust/Society