Understanding NPS (National Pension System)
For Government employees (joining after 2004), NPS is the primary retirement benefit.
- Contribution: 10% of (Basic + DA) is deducted from your salary, and the Govt contributes 14%.
- Compounding: The money is invested in equity/debt. An average return of 9-10% creates a huge corpus over 30 years.
- Exit Rule: At age 60, you can withdraw up to 60% of the corpus as tax-free cash. The remaining 40% must be used to buy an annuity plan for monthly pension.