Retirement is a time when you can finally unwind and realize your long-held ambitions. However, if you are financially unprepared, it can be a difficult time. 

The National Pension System (NPS) is financial security and stability during old age when people don't have a regular source of income. It is offered by the government under a retirement cum pension scheme. The investors get the dual benefit of tax-saving and retirement planning, by investing in it. It provides a benefit to individuals by way of a deduction under Section 80C.  

It not only secures your retirement planning but also saves taxes of up to Rs 2,00,000 a year. Both private and government employees can invest in NPS. The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a few changes in NPS. 

NPS offers two categories of accounts as of now:

• Tier 1 Account: Meant for retirement savings for govt and private sector employees along with other Indian citizens
• Tier 2 Account: Meant for general investment

When you want to invest in NPS, you first need to open an account under Tier I before you can consider opening the Tier II account. 

Tier I and Tier II NPS
	Tier I	Tier II
Eligibility	Any Indian citizen between 18 & 65 years of age	Members of Tier I only
Lock-in	Till the age of 60 years	Nil
Minimum number of contributions in year	1	Nil, you can choose not to make any contribution in a year
Minimum contribution for account opening	Rs 500	Rs 1,000
Minimum amount for subsequent contribution	Rs 500	Rs 250
Minimum number of annual contributions	1	Not mandatory
Fund management charge	Charges are the same for both Tier I and Tier II accounts
Available asset classes	Same for both Equity (E): Scheme invests predominantly in Equity market instruments. Corporate Debt (C): Scheme invests in Bonds issued by Public Sector Undertakings (PSUs), Public Financial Institutions (PFIs), Infrastructure Companies and Money Market Instruments Government Securities (G): Scheme invests in Securities issued by Central Government, State Governments and Money Market Instruments Alternative Investment Funds (A): In this asset class, investments are being made in instruments like CMBS, REITS, AIFs, etc.
Tax benefits on the contribution	Contribution to NPS Tier I qualifies for tax deduction under Section 80C up to Rs 1.5 lakh. Tax deduction is available under Section 80CCD (1B) up to Rs 50,000 in addition to Section 80C benefits.	No tax benefit
Taxation on withdrawal	At maturity, the entire corpus is tax-exempt	The entire corpus can be withdrawn, which is added to income and taxed as per the tax slab one falls in

Therefore, If you want to enjoy your retirement days without having to worry about your expenses, it is advisable to invest in the NPS. By investing early, you can prepare for a hassle-free and peaceful retirement life.

Wealth cafe advice

If you are concerned about your retirement and want to ensure a decent monthly income, then you should opt for NPS. It is an easily accessible, low-cost, tax-efficient, flexible, and portable retirement saving account.