NPS and Financial Planning: Integrating NPS into Your Retirement Portfolio

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There are various investment options available in the market for retirement planning. But NPS is becoming very popular these days. It is a government-backed retirement savings program. Hence it is more secure and assures stability.

Moreover, you can invest in NPS online. You just need to provide some basic details and your NPS account will be opened. In this article, we will understand in detail about NPS and how it can help in retirement planning.

What is NPS?

The National Pension Scheme (NPS) is a retirement savings scheme backed by the government. It is very popular among salaried individuals. Even self-employed can invest in it and take the benefit. This scheme allows you to invest a certain amount on a regular basis.

This regular investment will create a retirement corpus for you. Out of this, you can withdraw 60% at the time of retirement. The remaining 40% shall be used for buying an annuity plan which will give you a regular pension.

The NPS Scheme was launched by the Government of India in the year 2004. Initially, it was implemented only for government officials. However, from 2009 it was made available to all. You can invest in NPSby opening an account online. Anyone from the age of 18 years to 60 years can invest in NPS.

How to Integrate NPS in Your Retirement Portfolio?

NPS plays an important role in retirement planning. Let’s understand how can you integrate NPS into your retirement portfolio.

  1. Analyse Your Retirement Goals

Firstly, you need to determine your retirement goals. On the basis of your remaining years of retirement, your monthly income, and lifestyle you can decide how much corpus you will need at the time of retirement. Also, take into consideration the inflation factor.

  1. Understand Asset Allocation

Diversification is very necessary in your retirement portfolio. Never rely on a single investment option. But diversify it. Review your ongoing investments in retirement planning.

NPS allows you to invest in equity, government securities, corporate bonds and alternate investments. Determine the asset allocation based on your portfolio in retirement schemes.

  1. Decide Your Contribution Amount

You can open the NPS account with a minimum amount of ₹100. There is no regular fixed amount necessary to be contributed to the NPS account. You can invest as per your requirements. But in order to get maximum benefit invest a good amount of money in the scheme.

  1. Select an Appropriate Fund

NPS offer different fund options which include equity, government securities, corporate bonds and alternative investments. Determine the funds considering your investment period and risk-taking capacity. If enough time is left for your retirement, then you can give a higher allocation to equity.

  1. Monitor the NPS account

Regular monitoring of your NPS account is necessary. You can rebalance your investment as per the requirement or if it is not rewarding good enough.

Benefits of NPS

The following are the benefits of NPS: –

  1. Professional Fund Management

NPS allows you to invest in a variety of investment options which include equity, corporate bonds, government securities and alternate investments. The fund invested in these investment options is managed by the professional fund manager. They take care of your investment and make the right decision to give you the best returns.

  1. Well regulated

NPS is a government-backed scheme so it is quite regulated. The government has appointed the PFRDA to look after the NPS.

  1. Flexibility

NPS offers enough flexibility in investment options and fund managers. You have the freedom to invest in different asset classes depending on your risk-taking capacity. Also, you have the freedom to select the fund manager of your choice.

  1. Tax Benefits

NPS offers you tax benefits. The investment made in the NPS account is eligible for tax deduction under Section 80C of the IT Act up to the limit of ₹1.50 lakhs. In addition to this, the NPS contributions are also eligible for a deduction of ₹50000 under Section 80CCD (1B) of the IT Act.

  1. Long-term wealth creation

NPS helps in long-term wealth creation which is mainly aimed at retirement planning. By regular contributions to NPS, you can create enough funds for your retirement. It is advisable to start as early as possible to get maximum benefit of returns.

  1. Pension Annuity

On reaching the retirement age of 60, you can withdraw 60% of the investment corpus. While the remaining 40% shall be used to buy the annuity plan. NPS have a tie-up with some insurance companies to offer you the best annuity options. This will allow you to get a regular pension after retirement.


NPS is a very good investment option for retirement planning. It is backed by the government and assures you a fixed income after retirement. Take care while doing asset allocation in NPS investment. Invest in various assets as per your risk appetite. If you are planning to invest in NPS then you can do it online as well as offline.

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