I want to know about the NPS. What kind of investment will it be? I have been told that the amount we invest in it, the same amount will be put in by the government as well. Is this true?
-Krishna Gopal
What you're saying is true to a certain extent. If you're a government employee, a National Pension Scheme (NPS) account would have been opened in your name. An NPS account is mandatory for all central government employees who have joined after 1st April 2004.
What you’ve been told is true for these central government employees. If they put in an amount in the NPS, the government adds the exact same amount in their account as well. However, the government will not be responsible for the pension of these employees after they retire, as was the case earlier. The government’s responsibility ends once they’ve matched your contribution in the NPS. We believe that this is a good scheme.
For other investors, the NPS is a tax-saving scheme under Section 80C and will continue to be so even after the Direct Tax Code (DTC) comes into effect. For small investors, who invest Rs 10,000 or less in the NPS annually, the government gives a subsidy of Rs 1,000. Hence, the NPS is a good pension-oriented saving vehicle for small investors. However, remember that you won't be able to redeem your NPS investments before your term ends.
