National Pension System Diwas is celebrated on October 1 every year in India by the Pension Fund Regulatory and Development Authority (PFRDA). It aims to promote pension and retirement planning among the citizens of India and enjoy financial independence post retirement.
The Pension Fund Regulatory & Development Authority (PFRDA) Act was passed on September 19, 2013, and the same was notified on 1 February 1, 2014. PFRDA is regulating NPS, subscribed by employees of Govt. of India and state Governments and by employees of private institutions/organizations & unorganized sectors.
Objectives of celebrating NPS diwas:
A number of goals of the National Pension System Diwas are essential to advancing the NPS and its advantages.
- It seeks to encourage people to start saving for retirement by educating them about the benefits and characteristics of the NPS.
- It aims to inform people about the flexible and voluntary nature of NPS and emphasize the value of consistent contributions in accumulating a retirement corpus.
- Highlights the importance of retirement planning and the role NPS plays in achieving financial security.
There are two kinds of NPS accounts:
• Tier I NPS Account: With a minimum investment requirement of INR 500 and no upper threshold, this account comes with a lock-in period until the depositor reaches 60. Upon maturity, up to 60% of the accumulated amount can be withdrawn, while the remaining 40% must be utilized to purchase an annuity from an insurance provider to acquire a monthly pension.
• Tier II NPS Account: Tier II account is a voluntary account available for individuals who already possess a Tier I account. To open a Tier II account, individuals are required to make a minimum deposit of Rs 250.
Eligibility:
Any Individual citizen of India (both resident and Non-resident) in the age group of 18-70 years (as on the date of submission of NPS application) can join NPS.
Tax Benefits;
- Tax deduction up to 10% of salary (Basic + DA) under section 80 CCD(1) within the overall ceiling of Rs. 1.50 lakh under Sec 80 CCE.
- Tax deduction up to ₹50,000 under section 80 CCD(1B) over and above the overall ceiling of Rs. 1.50 lakh under Sec 80 CCE.
Changes :
- On August 24, 2024, the NDA government unveiled what it called a new " Unified Pension Scheme"(UPS), which is essentially similar to the old pension Scheme and guarantees government employees 50% of their last drawn pay as a lifetime monthly benefit.
- This undid the bold 21-year reform of India's civil services pension system the Atal Bihari Vajpayee government had introduced.
- The Unified Pension Schemes, which was approved by the cabinet on August 24, 2024 guarantees official a family pension equal to 60% of a government worker's pension in the event of their death, a lump sum retirement benefits payout in addition to gratuity benefits at the time of retirement, and periodic dearness relief hikes inline with inflation trends.
- A minimum pension of rs. 10,000 per month has also been offered to individuals who finish at least 10 years of service with the central government.
Report:
The National Pension System(NPS) has seen a significant increase in subscribers in the financial year 2023-24. As of March 2024, the total number of subscribers has reached 73,555,721, registering a growth of 16.28% compared to March 2023. This growth can be attributed to various factors, including increased awareness about the benefits of NPS and government initiatives to promote its adoption.
Among the different categories of subscribers, All Citizens continue to lead with 3,563,984 subscribers, followed by APY with 55,511,801 subscribers. The growth in NPS subscribers is a positive indicator of the long-term financial security of the Indian population.
