National Pension System and Changes approved in it

✓ Changes approved in the National 
Pension System:
•Mandatory contribution by the 
Central Government enhanced by 4 
percent from the existing 10 percent to 
14 percent for employees covered 
under NPS Tier-I
•Central government employees will be 
provided with freedom of choice for 
selection of Pension Funds and pattern 
of investment.
•Payment of compensation for non-
deposit or delayed deposit of NPS
contributions during 2004-2012
•Contribution by Government 
employees under Tier-II of NPS will now 
be covered under Section 80 C for 
deduction up to Rs 1.50 lakh for the 
purpose of income tax at par with 
schemes such as General (PF), 
Contributory PF, Employees PF and 
Public PF, with lock-in period of 3 years.
•The entire withdrawal will now be 
exempt from income tax as the tax 
exemption limit for lump sum 
withdrawal on exit has been enhanced 
to 60 percent.

✓ About National Pension System 
(NPS)?
•National Pension System (NPS) is a 
government-sponsored pension scheme. 
It was launched in January 2004 for 
government employees. However, in 
2009, it was opened to all sections.
•The scheme allows subscribers to 
contribute regularly in a pension 
account during their working life. On 
retirement, subscribers can withdraw a 
part of the corpus in a lumpsum and use 
the remaining corpus to buy an annuity 
to secure a regular income after 
retirement.
•This system is managed by PFRDA 
(Pension Fund Regulatory and 
Development Authority).
✓ Who can join NPS?
•Any Indian citizen between 18 and 60 
years can join NPS. The only condition is 
that the person must comply with 
know your customer (KYC) norms.
✓ Can a Non Resident Indian (NRI) join 
NPS?
•Yes, an NRI can join NPS. However, the 
account will be closed if there is a 
change in the citizenship status of the 
NRI.