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Top Reasons To Invest In National Pension Scheme

Updated On Aug 01, 2021

What Is the National Pension Scheme?

National Pension Scheme (NPS) is a government-owned investment option framed for professionals or employees of public, private, or unorganised sectors. With such schemes, the investors can invest a part of their income at regular intervals. Once the age of retirement approaches, the applicants will be allowed to withdraw some percentage of the earned financial corpus, while the rest of the amount will be given as a regular pension. People can invest as low as Rs. 500 to any limit. The NPS contributions are invested in various securities, investment schemes and equity markets.

Benefits of Investing in National Pension Schemes

The National Pension Scheme offers a systematic savings facility for people who want to secure their days after retirement. It comes with several benefits that turn it out to be one of the most popular investment instruments. Here are the reasons for which you should invest in NPS:

1. Source of Earning

Your source of earning, generally, in terms of salary stops but the domestic expenses persist like as usual. In addition to this, the soaring inflation is also going to have a deep impact on every aspect of our lives. So, to match up the lifestyle you have been living, you will have to find a regular income. NPS provides you with an option in the form of pension for your retirement life, therefore, it turns out to be a saviour in your most crucial phase.

2. Low-Risk Investment

When compared to other investment tools, the NPS is a low-risk and low-cost instrument. Also, being backed by the government, the risk cap on the equities under this scheme ranges between 50% and 75%. The risk exposure of the investors at the age of 50 is 75% that also gets decreased by around 2.5% by the time the policyholder turns 60. With such equity exposure, the NPS gives higher-earning opportunities with minimal contribution and lower risk exposure.

3. Flexibility of Fund Allocation

The National Pension Scheme gives the flexibility to build the fund portfolio on the basis of investor’s convenience. The investors are allowed to allocate among the four assets based on their risk appetite. However, these funds can be rearranged whenever the investor is found to be unhappy with the performance of the fund. 

4. Guaranteed Returns

Although a part of the National Pension Scheme is invested in market equities that may not be able to deliver assured returns, the overall returns you get from this scheme are guaranteed. In addition to this, the guaranteed returns provided by these schemes are higher when compared to other investment tools such as FDs or PPF. 

5. Tax Benefits

Tax benefits as per section 80C of the Income Tax Act can be derived under the NPS. The contributions made by you towards NPS are eligible for tax deductions for the maximum Rs 50,000 under section 80CCD (1B). Above this exemption, you can make the claim for investing Rs. 1,50,000 under section 80C of the Income Tax Act, which can help you save a considerable tax every year.


By investing in the National Pension Scheme (NPS), you can reap the benefits in your old age when you require financial security the most in your life. Therefore, invest in NPS today and get yourself prepared for tomorrow. 

Also Read:- Top Questions To Ask When Buying Retirement Insurance Plans

How to Get Your Retirement Planning on Track? 

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.       

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