The National Pension System (NPS) Tier I Account is a retirement
savings account regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
It allows eligible individuals to invest regularly and build a retirement corpus through
market-linked investments. Subscribers can choose their investment strategy, select a
Pension Fund Manager and access tax benefits subject to the applicable rules. Withdrawals
are restricted by NPS regulations, helping subscribers preserve their savings for
retirement. At exit, the amount that can be withdrawn as a lump sum or used to purchase an
annuity depends on the subscriber's circumstances and the applicable exit rules.
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An NPS Tier I Account is the main retirement savings account under the National Pension
System. It is designed to help subscribers accumulate money over the long term through investments in
market-linked assets. Unlike an ordinary savings or investment account, it has specific withdrawal
conditions intended to support retirement planning.
When you open an NPS account, you receive a unique 12-digit Permanent Retirement Account Number (PRAN). This
number identifies your pension account and allows you to manage your contributions, investment choices and
accumulated retirement savings.
Your contributions are invested according to your selected investment option and asset
allocation. The value of your retirement corpus depends on your contributions, investment performance and
applicable charges. Since NPS is market-linked, returns are not guaranteed.
Can parents open an NPS Tier 1 account for a child?
Parents and legal guardians can open an NPS Vatsalya account for a minor child. When
the child turns 18, the account transitions to the applicable regular NPS framework, subject to the
prescribed procedures and requirements.
Open an NPS Tier I Account via PensionBazaar
PensionBazaar is a PFRDA-registered NPS Point of Presence, which means it can help you open and manage your NPS account. You can easily complete
identity verification online, choose your preferred pension fund manager and decide how your savings will be
invested. You can manage your investments yourself through Active Choice or let the NPS system allocate them
through Auto Choice.
To understand what you need and how each step works, you can follow our step-by-step guide to opening an NPS
account online. Once your registration is successfully completed and your initial contribution is
processed, you receive a 12-digit Permanent Retirement Account Number (PRAN), which serves as your unique
NPS account number.
What Changed in NPS Tier I Rules in 2025 and 2026?
PFRDA introduced several changes to NPS rules to give non-government subscribers more
flexibility in choosing investments and accessing their retirement savings.
The most important changes in the NPS Tier I guidelines are summarised below.
Date
What Changed
1 October 2025
The Multiple Scheme Framework (MSF) allowed non-government subscribers to invest in
different schemes offered by Pension Funds using a single PRAN or multiple PRANs linked to
their PAN. Certain high-risk schemes offer equity exposure of up to 100%.
16 December 2025
Revised exit rules increased the maximum lump-sum withdrawal at normal exit to 80% for
eligible non-government subscribers, with at least 20% allocated to an annuity. The rules
also introduced different withdrawal options based on corpus size.
December 2025
The minimum 15-year vesting period under MSF schemes became an important exit condition,
alongside the applicable age or retirement conditions.
2026
PFRDA continued updating the regulatory framework for NPS, including exit provisions and
charges. Subscribers should check the rules applicable to their scheme and subscriber
category before making decisions.
These changes do not apply identically to every NPS subscriber. The applicable rules depend
on the account type, scheme and exit circumstances.
NPS Tier I vs Tier II
NPS offers two account types with different purposes. Tier I is designed primarily for
retirement savings, while Tier II provides an
optional investment facility with more flexible withdrawals.
Feature
NPS Tier I Account
NPS Tier II Account
Purpose
Long-term retirement savings
Optional investment and savings
Account requirement
Can be opened as the primary NPS account
Requires an active Tier I account
Withdrawals
Subject to NPS withdrawal and exit rules
Generally available at any time, subject to applicable rules
Tax benefits on contributions
Eligible contributions may qualify for tax deductions
Generally no deduction for contributions under the standard Tier II account
Tax treatment of withdrawals
Depends on the applicable NPS exit and tax rules
Depends on the applicable tax treatment
Annuity requirement
May apply at exit, depending on the rules and corpus
No mandatory annuity requirement
Eligibility
Available to eligible Indian citizens, NRIs and OCI cardholders
Not available to NRI and OCI subscribers under the current rules
NPS Tier I account may suit people building a retirement corpus, while Tier II account offers
greater withdrawal flexibility to eligible subscribers.
NPS Tier I Account Eligibility
Eligibility for an NPS Tier I account depends on the applicant's age, citizenship or OCI
status, and ability to complete the prescribed KYC process.
NPS Subscriber Age and Citizenship
Eligible individuals can open an NPS Tier I Account if they meet the entry-age and KYC
requirements under the applicable NPS model.
Age: The entry-age limit under the current All Citizen Model has been extended to 85
years. Applicants should check the applicable registration conditions before applying.
Citizenship: Eligible Indian citizens, NRIs and OCI cardholders can subscribe to NPS.
KYC requirements: Applicants must complete identity and address verification using the
documents accepted for their registration category.
Continuing the account: Subscribers can continue their NPS investments beyond the usual
retirement age, subject to the applicable rules.
Hindu Undivided Families (HUFs) and individuals holding only PIO status are not eligible to
open an NPS account under the All Citizen Model.
Documents: Applicants generally need a valid Indian PAN, a valid passport and the
documents required to establish their NRI or OCI status.
Banking channels: Contributions can be made through permitted banking channels,
including the subscriber's own NRE or NRO account, subject to applicable rules.
Repatriation: The repatriation of withdrawals and other proceeds is governed by the
applicable RBI and FEMA rules. It should not be assumed that all proceeds are automatically fully
repatriable.
Tier II restriction: NRI and OCI subscribers cannot activate a Tier II account under
the current NPS rules.
How Much Can You Contribute in an NPS Tier I Account?
NPS Tier I contributions help subscribers build a retirement corpus over time. The minimum
contribution requirements apply even though there is no prescribed maximum limit on the total amount a
subscriber can invest.
Contribution Rule
Details
Minimum opening contribution
Generally ₹500 under the standard All Citizen Model requirements; check the applicable
onboarding channel for current payment conditions
Minimum annual contribution
₹1,000 per financial year
Minimum subsequent contribution
Depends on the applicable contribution and payment-channel requirements
Maximum contribution
No prescribed upper limit
Missed annual contribution
The account may become inactive or require reactivation under the applicable procedures
How Does an NPS Tier I Account Invest Your Money?
An NPS Tier I Account invests your contributions in market-linked financial instruments
through a Pension Fund Manager (PFM). You can choose how your money is allocated based on your risk
tolerance, investment goals and retirement timeline.
Auto Choice vs Active Choice in NPS
NPS offers two main investment approaches under its Common Schemes. Active Choice gives you
greater control over your asset allocation, while Auto Choice adjusts your investments according to your
age.
Active Choice: You decide how to distribute your contributions across the available
asset classes, subject to the applicable investment limits. This option may suit subscribers who are
comfortable managing their investment allocation.
Auto Choice: Your money is allocated automatically across equity, corporate bonds and
government securities through a predefined Life Cycle Fund. Under Auto Choice, the allocation to equity
generally decreases as the subscriber approaches retirement. This is intended to reduce exposure to
market fluctuations over time, although it does not eliminate investment risk.
Asset Classes and Investment Limits for NPS Tier I Accounts
Each NPS asset class serves a different investment purpose, from pursuing long-term growth
through equity to providing exposure to debt instruments. Under the standard Active Choice framework, the
applicable limits are 75% for equity, 100% for corporate bonds, 100% for government securities and 5% for
alternative investment funds. The total allocation across asset classes cannot exceed 100%.
Asset Class
What It Invests In
Maximum Allocation Under Standard Active Choice
Scheme E (Equity)
Eligible shares and equity-related investments
75%
Scheme C (Corporate Bonds)
Corporate debt instruments, including eligible corporate bonds
100%
Scheme G (Government Securities)
Government securities and other permitted government debt instruments
100%
Scheme A (Alternative Assets)
Eligible Alternative Investment Funds (AIFs), subject to PFRDA investment guidelines
5%
What is MSF in NPS Tier I Accounts?
Introduced for non-government sector subscribers from 1 October 2025, the Multiple Scheme Framework allows
eligible subscribers to invest in multiple schemes offered by one or more Pension Fund Managers under NPS.
Some high-risk MSF schemes permit equity exposure of up to 100%, subject to the terms of the selected
scheme.
This option gives eligible non-government subscribers greater flexibility in selecting
investment strategies. However, a 100% equity allocation can expose the corpus to substantial market
fluctuations, and returns are not guaranteed. Subscribers should review the scheme's investment
mandate and risk disclosures before investing.
NPS Tier I Account Returns
Returns from an NPS Tier I Account depend on the performance of the selected pension fund and
its underlying investments. Unlike fixed-interest savings schemes, NPS does not offer a guaranteed rate of
return. The value of your investment can rise or fall with market conditions.
Does the NPS Tier I Account Give Guaranteed Returns?
No. An NPS Tier I Account does not offer a fixed or guaranteed interest rate like certain
small-savings schemes. Instead, returns are
market-linked and depend on the asset classes and pension fund schemes you choose.
Pension Fund Managers invest contributions according to the investment mandate of each
scheme. The value of the investment is reflected in its Net Asset Value (NAV), which changes as the
underlying investments perform. Your actual returns depend on the fund selected, the investment period, the
timing of contributions and market conditions.
NPS Tier I Returns by Asset Class
NPS offers different asset classes, each with its own return potential and risk level.
Understanding these differences can help you choose investments that match your financial goals and comfort
with risk.
Asset Class
Where the Money Is Invested
General Risk Level
Scheme E (Equity)
Eligible shares and equity-related investments
High
Scheme C (Corporate Bonds)
Corporate bonds and other eligible debt instruments
Moderate
Scheme G (Government Securities)
Government bonds and other permitted government debt instruments
Low to moderate
Scheme A (Alternative Assets)
Eligible alternative investment instruments
Depends on the investment
NPS returns differ between pension fund managers and can change over time. Therefore, there
is no single return rate for each asset class. You should compare the latest one-year, three-year, five-year
and longer-term returns before choosing a scheme.
NPS Tier I Account Tax Benefits
NPS offers tax benefits on
eligible contributions, but the deductions available depend on the tax regime you choose. The rules for your
own contributions are different from those for contributions made by your employer.
Note: The Income-tax Act, 2025 came into effect on 1 April 2026. The section
numbers below refer to the earlier Income-tax Act, 1961. For Tax Year 2026-27 onwards, check the
corresponding provisions under the new Act before claiming a deduction.
NPS Tax Benefits Under the Old Tax Regime
Under the old tax regime, eligible subscribers could claim deductions on their own NPS
contributions under Sections 80CCD(1) and 80CCD(1B).
Section 80CCD(1): Salaried employees could claim a deduction on eligible NPS
contributions of up to 10% of salary, including Basic Salary and Dearness Allowance where applicable.
For self-employed individuals, the limit was 20% of gross total income. This deduction was included in
the overall ₹1.5 lakh limit shared with Sections 80C and 80CCC.
Section 80CCD(1B): Subscribers could claim an additional deduction of up to ₹50,000 for
eligible personal NPS contributions. This was over and above the ₹1.5 lakh limit.
Eligible subscribers could therefore claim deductions of up to ₹2 lakh for their own NPS
contributions, subject to the applicable rules. Employer contributions were covered separately.
NPS Tax Benefits Under the New Tax Regime
Under the new tax regime, you generally cannot claim deductions for your own NPS
contributions under the old Sections 80CCD(1) and 80CCD(1B).
However, eligible employer contributions to your NPS account may still qualify for a tax
deduction. This means that your employer's contribution can offer a tax benefit even when your own
contributions do not qualify for the same deductions.
Tax Deduction on Employer Contributions to NPS
If your employer contributes to your NPS account, you may be able to claim a tax deduction on
that contribution. The limit depends on your employer category and the tax regime.
Under the earlier Income-tax Act, 1961, the deduction under Section 80CCD(2) was generally
subject to these limits:
New tax regime: Up to 14% of eligible salary for employees, including private-sector
employees, subject to the applicable rules.
Old tax regime: Up to 10% of eligible salary for employees of non-government employers
and up to 14% for Central and State Government employees.
There is also a separate tax rule for high employer contributions. If the combined employer
contributions to NPS, recognised provident funds and approved superannuation funds exceed ₹7.5 lakh in a
financial year, the excess may be taxable as a perquisite.
NPS Tax Savings Example
The following example shows how eligible NPS contributions could reduce tax under the old tax
regime. Your actual tax saving will depend on your income, tax slab and eligibility for deductions.
Suppose an employee qualifies for the full ₹2 lakh deduction and pays tax at a marginal rate
of 30%, plus 4% health and education cess.
Particulars
Amount
Eligible personal contribution deduction under Section 80CCD(1), within the shared limit
₹1,50,000
Additional deduction under Section 80CCD(1B)
₹50,000
Total eligible deduction
₹2,00,000
Assumed marginal tax rate, including cess
31.2%
Illustrative tax saving
₹62,400
Calculation: ₹2,00,000 × 31.2% = ₹62,400.
Documents Required to Open an NPS Tier I Account
The documents required to open an NPS tier I account depend on your residential status and
the method you use to register. Keep the relevant identity, address and banking documents ready before
starting the application.
For resident Indian applicants, the usual requirements include:
PAN card: For PAN verification.
Proof of address: An accepted document showing your current address.
Photograph: A recent photograph, where required.
Bank details: Details of an active bank account for eligible transactions.
Additional documents: Any other information or documents requested during KYC
verification.
NRIs and Overseas Citizens of India
(OCIs) must provide additional documents, such as a passport or OCI card, proof of address and
details of an eligible NRE or NRO bank account, as applicable.
How to Open an NPS Tier I Account?
You can easily open an NPS account through PensionBazaar and get started with your retirement
planning.
How to Open an NPS Tier I Account Online Through e-NPS?
The online process to open an NPS tier I account allows eligible individuals to register for
NPS without visiting a bank branch. You can complete the application and select your investment preferences
through an authorised registration platform.
Visit the official NPS Trust e-NPS platform or an authorised CRA portal.
Select the option to register for a new NPS account.
Choose the applicable subscriber category and select Tier I as your pension account.
Complete identity verification and KYC using the options available on the portal.
Enter your personal details, address and bank account information.
Select your Pension Fund Manager (PFM) and investment option, such as Active Choice or Auto Choice,
where available.
Submit the required information and make the initial contribution according to the applicable minimum
amount and payment instructions.
Complete the final verification steps to receive your PRAN and account details.
How to Open an NPS Tier I Account Offline Through a PoP?
If you prefer to register for an NPS tier I account in person, you can apply through a
registered Point of Presence, such as an authorised bank branch.
Visit a registered PoP that offers NPS registration.
Request the relevant subscriber registration form.
Complete the form with your personal, contact and bank details.
Attach the required KYC documents and photograph.
Submit the form and initial contribution as instructed by the PoP.
Complete any additional verification required to activate your account.
Once the application is processed, your PRAN will be allocated according to the applicable
registration procedure.
What to Do After Opening an NPS Tier I Account?
After your NPS Tier I account is opened, your PRAN becomes the main reference number for
managing your NPS savings. You can use your PRAN to access the services offered by your CRA and manage your
NPS account.
Activate your online subscriber account, where required.
Check your personal and bank details.
Add or update nominee details.
Review your investment allocation and contribution records.
Download transaction statements when needed for recordkeeping and tax purposes.
Key Takeaways on NPS Tier I Accounts
An NPS Tier I account can help you build retirement savings through regular contributions and
market-linked investments over the long term. You can choose a pension fund and investment approach based on
your financial goals and risk tolerance. Before investing, understand the applicable charges, withdrawal
conditions, annuity requirements and tax treatment. Starting early and reviewing your investment choices
periodically can help you plan more effectively for retirement.
FAQs About NPS Tier I
Q. How much
can I withdraw through partial withdrawal from NPS Tier I?
After completing at least three years of subscription, you may withdraw up to 25%
of your own eligible contributions for permitted purposes, such as specified medical treatment,
children's education or marriage, and buying or constructing a house. Before age 60, up to four
partial withdrawals are generally allowed, with a four-year interval between them.
Q. How much of
the NPS Tier I corpus can I withdraw at retirement?
Under the current All Citizen Model rules, eligible subscribers can generally
withdraw up to 80% of their corpus as a lump sum and use at least 20% to purchase an annuity.
Special options apply to smaller corpora, including those up to ₹12 lakh. The available option
depends on the corpus and applicable exit conditions.
Q. What
happens if I exit NPS Tier I before the normal exit conditions are met?
Premature exit generally allows up to 20% of the accumulated corpus as a lump
sum, while at least 80% must be used to purchase an annuity. If the corpus is ₹5 lakh or less,
full withdrawal or other permitted payout options may be available. Check the current exit rules
before submitting a request.
Q. What
happens to an NPS Tier I account after the subscriber's death?
When an NPS subscriber dies, the nominee, eligible family member or legal heir
can claim the accumulated pension wealth by following the prescribed claim process. Under the
current All Citizen Model rules, a 100% lump-sum payout is permitted, with other approved payout
options also available. Required documents and claim procedures must be completed.
Q. Does an NPS
Tier I account offer tax benefits?
NPS may offer tax benefits on eligible contributions and withdrawals, subject to
the tax regime, applicable provisions and individual circumstances. Tax rules changed with the
Income-tax Act, 2025 taking effect from 1 April 2026, so check the provisions currently in force
before relying on older section references. Annuity income is generally taxable when received.
Q. Can I open
an NPS Tier I account online?
Yes. You can open an NPS Tier I account online through the official eNPS platform
or an authorised registration channel. You can also start the process through PensionBazaar's
online NPS account-opening page. Keep your PAN, identity and address details, bank information
and other required KYC documents ready before registering.
27 Oct 2026 
