National Pension System - NPS - Safety for the future & tax free benefit

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 National Pension System 

There are two important reasons for every person (18-55 years) to open a 

NPS account-(1) to enjoy a secured future by way of pension income and (2) to get "tax free" benefit wherever possible. 

As per the new provisions of the Income Tax Act, when an employer directly makes a contribution to the National Pension System of the employees, (up to 10% of the basic and DA subject to a maximum of Rs.1 lac), it is fully tax free at the hands of the employee. This is over and above the overall limit of Rs.1 lac provided under section 80C, 80CCC and 80CCD(1).

In short, contribution from the employer is practically a tax free benefit in the hands of the employee. You can very well contact your employer & request them to consider this option at least whenever there is a performance linked incentive or bonus.

The following table is an indication of the likely money available at the time a person reaches 60 years (Rate of return assumed at 10%) on various savings levels.     

Age at the time of joining	Future savings (in years)	Total Contribution to NPS per annum
		10000	20000	30000	40000	50000
		(app. Maturity value in lacs)
25	35	31.64	63.28	94.92	126.56	158.2
30	30	18.84	37.68	56.52	75.36	94.2
35	25	11.06	22.12	33.18	44.24	55.3
40	20	6.33	12.66	18.99	25.32	31.65
45	15	3.45	6.9	10.35	13.8	17.25
50	10	1.7	3.4	5.1	6.8	8.5
55	5	0.65	1.3	1.95	2.6	3.25

Needless to mention, you can share this with your employee son / daughter in the long term interest of their peaceful retired life.