I have had a very good experience investing in the National Pension Scheme (NPS) over the last three years. I started investing ₹ 2,000 per month in NPS once I began working at the age of 25.
The key benefits I have experienced are—regular returns between 9-12% per annum, online account access, and transparency of investments. I can log in anytime and view how my money is being invested across various asset classes by the fund managers. This gives me comfort that my retirement savings are in safe hands.
Additionally, using tools like the NPS return calculator helps me estimate my potential corpus based on my contributions and expected returns, giving me better control over my retirement planning. I also save substantially on my taxes by claiming deductions under Sec 80CCD.
In my opinion, the NPS offers stability and safety of returns, which may not be guaranteed in other private retirement plans. Since it is government-administered, there is strict regulation and oversight on fund performance. The only con I faced was the limitation on withdrawal before retirement age. I cannot access my NPS corpus until I turn 60, which restricts the use of funds for emergencies.
For example, my wife, who is also an NPS member, was recently diagnosed with a medical condition requiring surgery. We cannot withdraw our NPS savings for this expense and must arrange from other sources. This is an inconvenience, and I wish the NPS guidelines could be improved.
Overall, I strongly recommend the NPS program for retirement planning, especially for citizens employed in the unorganised sector. By making small, regular investments from an early age, you can create a large tax-efficient corpus over time. I motivated my younger brother, who works in a private firm, to start his own NPS account last month to benefit from compounding interest.