Corporate NPS makes more sense than ever—if your employer offers it

retirement age defined by the organisation overrides the option of exit after completion of 15 years,” said Sumit Shukla, MD and CEO, Axis Pension Fund.The main hesitation towards NPS was the lock-in until 60 years of age and the minimum 40% annuity. “Now, both have been considerably eased.

Also, no one puts all their savings in NPS, and of that, only a small part goes to an annuity,” said Deepesh Raghaw, founder, PersonalFinancePlan.in and a Sebi-registered investment adviser.Furthermore, under the new tax regime, NPS subscribers can claim a tax deduction only for their employer’s contribution and not their own. This ups the case for corporate NPS.However, given that many companies still don’t offer NPS, this option is limited for many employees.

For those it does, Raghaw recommends they exhaust it to the maximum extent of an employer’s contribution (part of an employee’s cost to company or CTC) that is tax-deductible.Apart from central and state government employees who are covered by NPS, any Indian citizen aged 18 to 85 can invest in the scheme under the ‘all citizen model’ (individual NPS).Companies, whether in the private or public sector, can offer NPS to their employees under the corporate sector model. Under this, the employer makes contributions towards the employee’s NPS account.

The employer can claim this as a business expense and the employee as a tax deduction. Additionally, the employee can also make their own contribution.Tax treatment is where corporate NPS clearly scores over individual NPS, especially under the new tax regime.Under this, employees can claim a deduction for their employer’s contribution to NPS of up to 14% of basic pay plus dearness allowance (DA).