The National Pension System (NPS) is a retirement savings scheme in India. It allows people to save money during their working years and make decisions about their future financial security. NPS encourages citizens to develop a habit of saving for retirement.

Under NPS, individuals’ savings are pooled together and invested by professional fund managers regulated by the Pension Fund Regulatory and Development Authority (PFRDA). The investments include government bonds, bills, corporate debentures, and shares. Over time, these contributions grow and accumulate based on the investment returns.

When someone leaves the NPS, they can use their accumulated pension savings to buy a life annuity from an insurance company approved by the PFRDA. They can also choose to withdraw a portion of their savings as a lump sum.