For long-term goal planning, particularly retirement, deciding on a prudent investment option is essential. One such appealing choice is the National Pension System (NPS). The NPS scheme is a government-backed retirement savings financial product that provides numerous benefits and has garnered popularity among retail investors in recent years. Owing to its exclusive tax benefits, market-linked nature, and investment flexibility, an NPS subscription is considered a preferred option by many looking for a secure financial future. 

Top reasons to open an NPS account 

Tax benefits

Contributions towards NPS qualify for a tax deduction as per section 80C, offering you the opportunity to save on your tax liabilities. Moreover, an exclusive tax deduction under section 80CCD(1B) of Rs 50,000 is allowed, which is over and above the limit of section 80C. This makes the NPS option a tax-efficient choice, allowing you to maximise your savings while planning for post-retirement years. 

Investment flexibility

NPS offers considerable investment flexibility. It permits you to select from multiple Pension Fund Managers (PFMs) and allows you to choose from distinct asset classes like corporate bonds, equities, government securities, and alternative investment funds. You can personalise your investment strategy by choosing the asset allocation and PFM that aligns with your risk tolerance level and crucial financial goals. 

Also, NPS endows you the flexibility to switch between investment choices or PFMs, allowing you to adapt your investments depending on your preferences and market conditions. This flexibility in investment helps to tailor your NPS portfolio according to your specific needs, enhancing the effectiveness of your financial planning. 

Retirement focus

NPS is designed to meet the needs of retirement planning. With rising life expectancy and increasing inflation, it has become necessary to accumulate an adequate corpus to sustain a stress-free financial life during retirement. NPS provides you with the opportunity to form an adequate post-retirement corpus by periodically contributing over the long term. The investment scheme emphasises disciplined savings, permitting you to accumulate wealth in a disciplined manner and secure your financial future. 

Note that in case you are unable to decide the amount you must systematically invest in NPS to create an adequate retirement corpus, you can take the help of an online NPS scheme calculator. You may find such calculators on different financial platforms online. Using the NPS scheme calculator, you can estimate your retirement corpus depending on your age, investment tenure, and contribution amount. This calculator assists you to set a realistic retirement goal, permitting you to make an informed investment decision about NPS contributions. Using such tools, you can align your financial planning with your retirement aspirations for a financially secure and comfortable future. 

Ending note

NPS is undoubtedly a prudent investment product for long-term financial planning. Owing to its focus on the long-term goal of retirement, exclusive tax benefits, professional fund management, and investment flexibility, NPS serves as a comprehensive product to secure your financial future post retirement. By subscribing to this option, you can begin a disciplined investment journey and accumulate a substantial retirement corpus over the long term.