NPS, or National Pension System, is a government-regulated, market-linked retirement savings scheme open to almost any Indian citizen, where your contributions are invested across a mix of equity, corporate bonds, and government securities, based on choices you make or an auto-allocation model based on your age. It's designed to build a retirement corpus over your working life through regular contributions.
At retirement, current rules require you to use at least 40% of your accumulated corpus to purchase an annuity, which then pays you a regular monthly pension for life, while the remaining portion can be withdrawn as a lump sum, often tax-free up to a limit. NPS contributions also offer attractive tax benefits, including an additional deduction beyond the standard 80C limit, making it a popular tool specifically for retirement planning alongside other options like EPF and PPF.