Account Types
NPS Tier I and Tier II Accounts
Understand the two types of NPS accounts and how to use them optimally.
Tier I Account
Primary NPS account with tax benefits. Mandatory for all subscribers. Partial withdrawals allowed after 3 years for specific purposes.
- Tax deduction up to ₹2L (80C + 80CCD(1B))
- 60% lump sum tax-free at retirement
- 40% compulsory annuity purchase
- Lock-in till age 60
Tier II Account
Voluntary savings account with no lock-in. No tax benefits on contribution but withdrawals are fully free. Central government employees get 80C benefits.
- No lock-in period
- Flexible withdrawals anytime
- Lower expense ratios than most MFs
- Linked to Tier I account
Fund Options
Choose Your Investment Mix
NPS offers four asset classes. We help you allocate optimally based on your age and risk profile.
| Asset Class | Max Allocation | Expected Returns | Best Suited For |
|---|---|---|---|
| Equity (E) | Up to 75% | 12–14% | Young investors, long horizon |
| Corporate Debt (C) | Up to 100% | 8–10% | Conservative investors |
| Government Bonds (G) | Up to 100% | 7–9% | Risk-averse investors |
| Alternative Assets (A) | Up to 5% | Varies | Diversification seekers |
Benefits
Why NPS Deserves a Place in Your Portfolio
NPS combines the best of tax efficiency, market-linked growth, and retirement income — making it one of the most underutilised financial products in India.
- Additional ₹50,000 tax deduction under Section 80CCD(1B) over and above 80C
- Market-linked returns with choice of equity, corporate debt, and government bonds
- Flexible contribution — invest as per your capacity
- Low fund management charges compared to mutual funds
- Systematic pension income at retirement through annuity
- Partial withdrawal allowed for specific purposes after 3 years
FAQs
NPS Questions
What is the NPS tax benefit?
You get deductions up to ₹1.5L under 80C and an additional ₹50,000 under 80CCD(1B) — a maximum combined benefit of ₹2L per year.
Can I withdraw from NPS before retirement?
Yes, after 3 years, up to 25% of your own contributions can be withdrawn for specific purposes like children's education, marriage, home purchase, or medical treatment.
What happens to NPS at age 60?
You can withdraw up to 60% as a tax-free lump sum. The remaining 40% must be used to purchase an annuity that provides regular pension income.