The National Pension Scheme (NPS) is a government-backed retirement savings scheme for Indian citizens, regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

The National Pension Scheme (NPS) offers several benefits for individuals planning their retirement:

• Tax Benefits: By contributing to NPS, you can significantly reduce your taxable income, thereby saving on taxes and increasing your take-home pay. The extra deduction of ₹50,000 is over and above the regular ₹1.5 lakh limit, making it a lucrative option for tax planning.

• Low Cost: The low management fees mean that less of your investment is eaten up by administrative costs, leaving more money to grow over time. This is particularly beneficial for long-term investments.

• Flexibility: NPS’s flexibility allows you to adjust your investment strategy as your financial situation and risk tolerance change. For example, you can start with a higher equity allocation in your younger years and gradually shift to more conservative options as you approach retirement.

• Portability: With the job market becoming increasingly dynamic, the ability to carry your retirement savings with you as you are in-between jobs or locations is a significant advantage. It ensures continuity in your retirement planning.

• Market-Linked Returns: Since NPS invests in equities and bonds, it has the potential to offer higher returns compared to traditional PPFs. Over the long term, this can help in building a larger retirement corpus.

• Long-Term Savings: NPS's structure ensures that you save consistently for retirement. This disciplined approach helps in gradually building a sizable retirement fund.

• Partial Withdrawals: The option of partial withdrawals provides a safety net for emergencies, making NPS a flexible investment choice

• Annuity Options: Purchasing an annuity ensures that you receive a steady income after retirement, providing financial security and peace of mind. This makes NPS not just a savings scheme but a comprehensive retirement planning tool.

However, it also carries market risks similar to other investments in equities and bonds. Overall, NPS helps in retirement planning by providing a structured approach to accumulating a retirement corpus.