NPS (National Pension Scheme) is a Pension and Investment Scheme based on a subscriber's unique Permanent Retirement Account Number (PRAN). It is governed by PFRDA (Pension Fund Regulatory and Development Authority) under the control of the Central Government. It provides a compelling long-term saving alternative with a secure and regulated market-based return for successfully planning your retirement.

Earlier individuals between the ages of 18 and 60 could open an NPS account and start the journey of saving for their retirement. In 2018, the PFRDA raised the maximum age for joining the NPS from 60 to 65 years. Senior citizens can even extend their tenure to 70 years of age. Is it, however, beneficial for senior citizens to use NPS for retirement?

Returns that Senior Citizens can expect from NPS

The increase in the age range for opening an NPS Account will enable senior citizens to profit from NPS and plan for a steady income even after retirement. Returns that senior citizens can expect from NPS include:

Returns for Senior Citizens from NPS
  • Subscribers who join NPS after reaching the age of 60 will have the same pension fund and investment options as those who join NPS before reaching the age of 60.
  • Subscribers who join beyond the age of 60 will be offered the option of a normal exit after three years in the NPS. This means that the subscriber must use at least 40% of the corpus to acquire an annuity, with the remaining funds available for withdrawal in a lump sum.
  • If a subscriber wishes to leave the NPS before completing three years of service, he or she will be permitted to do so. However, in this situation, the subscriber must use at least 80% of the corpus to purchase an annuity, with the remainder being withdrawn as a lump sum.
  • In the event that a subscriber dies while participating in NPS, the entire corpus will be paid to the subscriber's nominee.
  • No other tax-saving investment matches NPS when it comes to saving funds. NPS contributions are eligible for both a deduction under Section 80 CCD (1) up to a maximum of Rs 1.5 lakh per financial year and an extra tax advantage under Section 80CCD (1B) up to Rs 50,000 per financial year.
  •  Many taxpayers take advantage of the additional tax benefit under Section 80CCD (1B) to lessen their tax burden. This is beneficial for retired taxpayers and those over the age of 60 who are still working.


The increase in the retirement age benefits those who are about to retire and expect a lump-sum amount but are willing to postpone their Retirement Planning for the future. They can put the lump sum money into an NPS for improved Fund Management by a Professional Fund Manager, resulting in higher returns and the ability to plan for a regular income in the future.

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