National Pension System (NPS)
Social Justice & Development
- PYQs8
- Articles1
Background
NPS is a cornerstone of India's social security architecture and retirement planning. Its reforms reflect evolving government policy on financial inclusion, market liberalization, and individual responsibility in retirement, impacting public finance, financial markets, and citizen welfare.
The National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme in India, regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It aims to provide old-age income security to citizens, encouraging them to save for retirement through market-linked returns.
Facts & tables
- Scheme Type & Regulation
- Voluntary, defined contribution retirement savings scheme regulated by PFRDA.
- Withdrawal Reforms (Dec 2025)
- Increased lump sum withdrawal to 80% (from 60%) and reduced mandatory annuity to 20% (from 40%) at age 60.
- Taxation of Withdrawals
- Only 60% of lump sum withdrawal is tax-exempt under Section 10(12A) of the Income Tax Act; the additional 20% is taxable at slab rates.
- Retirement Income Scheme (RIS)
- Introduced for gradual, periodic withdrawals (SLW or SUR) from the non-annuity portion, allowing the balance to remain invested.
| Type | Reference |
|---|---|
| Conceptual area | Social Security |
| Conceptual area | Financial Inclusion |
| Conceptual area | Public Finance |
| Body | Role |
|---|---|
| Pension Fund Regulatory and Development Authority (PFRDA) | Regulates |
Prelims angle
Prelims angle: Factual recall
Prelims angle: Policy measures
- Voluntary, defined contribution pension scheme.
- Regulated by PFRDA.
- Recent reforms: 80% lump sum withdrawal, 20% mandatory annuity.
- 60% withdrawal tax-exempt under IT Act 10(12A); additional 20% taxable.
- Introduced Retirement Income Scheme (RIS) for flexible post-retirement income.
| Year | Framing tags |
|---|---|
| 2026 | Multi-statement analysis, Factual recall |
| 2024 | Factual recall, Conceptual understanding |
| 2024 | Multi-statement analysis, Factual recall |
| 2020 | Multi-statement analysis, Factual recall |
| 2018 | Multi-statement analysis, Conceptual understanding |
| 2018 | Multi-statement analysis, Factual recall |
| 2017 | Factual recall, Policy measures |
| 2016 | Multi-statement analysis, Factual recall |
Timeline
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Social Security
Conceptual area
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Financial Inclusion
Conceptual area
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Public Finance
Conceptual area
-
Prelims 2016
Multi-statement analysis, Factual recall
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Prelims 2017
Factual recall, Policy measures
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Prelims 2018
Multi-statement analysis, Conceptual understanding
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Prelims 2018
Multi-statement analysis, Factual recall
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Prelims 2020
Multi-statement analysis, Factual recall
-
Prelims 2024
Factual recall, Conceptual understanding
-
Prelims 2024
Multi-statement analysis, Factual recall
-
Prelims 2026
Multi-statement analysis, Factual recall
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What new NPS withdrawal rules mean for retirement
NPS is India's market-linked, defined contribution pension scheme, recently reformed to allow higher lump sum withdrawals (80%) and introduce the Retirement Income Scheme (RIS) for flexible post-retirement income, though tax implications on the additional withdrawal remain.
See also
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Past papers
2016–2026 · 8 questions
In the news
What new NPS withdrawal rules mean for retirement
NPS is India's market-linked, defined contribution pension scheme, recently reformed to allow higher lump sum withdrawals (80%) and introduce the Retirement Income Scheme (RIS) for flexible post-retirement income, though tax implications on the additional withdrawal remain.
Try these PYQs
Who among the following can join the National Pension System (NPS)?
The Central Government introduced the National Pension System (NPS) with effect from January 1, 2004 (except for armed forces). Subsequently, various State Governments adopted this architecture and implemented NPS with effect from different dates. Eligibility to join
- Any citizen of India, whether resident or non-resident, subject to the following conditions.
- Individuals who are aged between 18 60 years, including NRIs.
- After attaining 60 years of age, you will not be permitted to make further contributions to the NPS accounts
With reference to the provisions made under the National Food Security Act, 2013 consider the following statements:
1. The families coming under the category of 'below poverty line (BPL)' only are eligible to receive subsidised grains.
2. The eldest woman in a household, of age 18 years or above, shall be the head of the household for the purpose of issuance of a ration card.
3. Pregnant women and lactating mothers are entitled to a take-home ration' of 1600 calories per day during pregnancy and for six months thereafter.
Which of the statements given above is/are correct?
Statement 1 is incorrect: In 2013, NFSA was enacted to provide food security to 67% of the population in the form of highly subsidized food grains at Rs. 2 and 3 per Kg for wheat and rice respectively. Beneficiaries are identified using Socio-economic Caste Census (SECC) methodology so even non-BPL will also benefit. Statement 2 is correct: Under the NFSA, to issue ration cards the eldest woman of a household aged 18 years or above would be considered as head. Hence, this statement is correct. Statement 3 is incorrect: Pregnant women and lactating mothers are entitled to a nutritious take home ration of 600 Calories and a maternity benefit of at least Rs 6,000 for six months, says the official act.
With reference to the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) Yojana, consider the following statements:
1. The entry age group for enrolment in the scheme is 21 to 40 years.
2. Age specific contribution shall be made by the beneficiary.
3. Each subscriber under the scheme shall receive a minimum pension of ₹ 3,000 per month after attaining the age of 60 years.
4. Family pension is applicable to the spouse and unmarried daughters.
Which of the statements given above is/are correct?
With reference to the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) Yojana, here's the breakdown of the statements: * Statement 1: Incorrect. The eligible age group for enrolment in the scheme is 18 to 40 years, not 21 to 40 years. This allows younger workers to join early and contribute for a longer period. * Statement 2: Correct. Beneficiaries are required to make age-specific monthly contributions, which increase with age. For instance, contributions start at ₹55 for an 18-year-old and go up to ₹200 for a 40-year-old. * Statement 3: Correct. Subscribers will receive a minimum pension of ₹3,000 per month after attaining 60 years of age. This provides social security for workers in the unorganized sector. * Statement 4: Incorrect. Family pension is available only to the spouse, who will receive 50% of the pension amount after the subscriber's death. Unmarried daughters are not eligible for this benefit.
Which of the following statements with regard to the persons with disabilities in India is/are correct ?
1. The Rights of Persons with Disabilities Act, an Act passed by the Parliament of India in 2018, mandates reservation in education and employment, places a legal duty on Governments to ensure accessibility and non-discrimination.
2. The Sugamya Bharat Abhiyan focuses on achieving universal accessibility for Persons with Disabilities across three key domains — built infrastructure, transport systems and information and communication technology.
3. The National Divyangjan Finance and Development Corporation (NDFDC) is a public sector organisation set up by the Ministry of Corporate Affairs as a not-for-profit company to promote entrepreneurship among Persons with Disabilities (PwDs).
Select the answer using the code given below :
Statement 1 is Incorrect: The Rights of Persons with Disabilities (RPwD) Act was passed by the Parliament of India in 2016, not 2018. It aligns with the UN Convention on the Rights of Persons with Disabilities and places a legal obligation on governments to ensure non-discrimination and accessibility. It also mandates reservations for PwDs, such as increasing the quota to 4% in government employment and 5% in higher education. Statement 2 is Correct: The Sugamya Bharat Abhiyan (Accessible India Campaign) was launched in 2015 by the Department of Empowerment of Persons with Disabilities (DEPwD). It focuses on achieving universal accessibility for Persons with Disabilities across three key domains: built infrastructure (barrier-free public buildings), transport systems (accessible railways, airports, and roads), and information and communication technology (accessible government websites and digital ecosystems). Statement 3 is Incorrect: The National Divyangjan Finance and Development Corporation (NDFDC) is a Central Public Sector Undertaking registered as a not-for-profit company to provide concessional financial assistance to promote entrepreneurship, self-employment, and higher education among PwDs. However, it was set up under the aegis of the Ministry of Social Justice and Empowerment, not the Ministry of Corporate Affairs. Therefore, the correct option is B.
With reference to Pradhan Mantri Kaushal Vikas Yojana, consider the following statements
1. It is the flagship scheme of the Ministry of Labour and Employment.
2. It, among other things, will also impart training in soft skills, entrepreneurship, financial and digital literacy.
3. It aims to align the competencies of the unregulated workforce of the country to the National Skill Qualification Framework.
Which of the statements given above is/are correct?
Statement 1 is Incorrect. The Ministry of Skill Development and Entrepreneurship (MSDE) is responsible for PMKVY, not the Ministry of Labour and Employment. Statement 2 is Correct. PMKVY goes beyond technical skills training and incorporates soft skills, entrepreneurship, financial literacy, and digital literacy to make participants more employable. Statement 3 is Correct. A core objective of PMKVY is to bridge the gap between the skills of the unregulated workforce and industry requirements by aligning them with the National Skill Qualification Framework (NSQF). This standardization helps ensure a minimum level of competency and improves employment opportunities.
Show 3 more PYQs
Regarding ‘Atal Pension Yojana’, which of the following statements is/are correct?
1. It is a minimum guaranteed pension scheme mainly targeted at unorganized sector workers
2. Only one member of a family can join the scheme
3. Some amount of pension is guaranteed for the spouse for life after the subscriber’s death.
Select the correct answer using the code given below:
Statement 1 is Correct: Atal Pension Yojana is a minimum guaranteed pension scheme primarily targeted at unorganized sector workers in India. It encourages saving for retirement through regular contributions during their working years. Statement 2 is Incorrect: There is no restriction on the number of family members who can join the Atal Pension Yojana scheme. As long as they meet the eligibility criteria (age 18-40 and savings bank account), multiple members within a family can enroll. Statement 3 is Correct: Atal Pension Yojana provides a pension benefit for the spouse after the subscriber's death. The spouse becomes the nominee and receives a pension, though the specific amount might differ depending on the chosen pension plan by the subscriber. Hence, option C is the correct answer.
With reference to the funds under Members of Parliament Local Area Development Scheme (MPLADS), which of the following statements are correct?
1. MPLADS funds must be used to create durable assets like physical infrastructure for health, education, etc.
2. A specified portion of each MP’s fund must benefit SC/ST populations
3. MPLADS funds are sanctioned on yearly basis and the unused funds cannot be carried forward to the next years
4. The district authority must inspect at least 10% of all works under implementation every year
Statement 1 is correct: The MPLAD scheme lets MPs recommend works for local infrastructure and development needs in their constituency. The focus is on creating durable assets that benefit the community. Certain works are prohibited under MPLAD guidelines, which MPs must follow. Statement 2 is correct: The scheme requires MPs to allocate at least 15% of the MPLADS entitlement for the year to areas inhabited by the Scheduled Caste population and 7.5% for areas inhabited by the Scheduled Tribe population. If there are insufficient tribal populations in the MP's constituency, they can recommend this amount for the creation of community assets in tribal areas outside their constituency, but within their State of election. If a state does not have Scheduled Tribe inhabited areas, this amount can be utilized in Scheduled Caste areas. Statement 3 is incorrect: Funds released to the District Authority by the Government of India under the MPLAD scheme are non-lapsable, meaning that funds left in the district can be carried forward and utilized in subsequent years. Statement 4 is correct: The District Authority is responsible for coordinating and supervising the works under the scheme at the district level. They also inspect at least 10% of the works under implementation every year. Based on the above information, the correct answer is (d).
With reference to the 'Pradhan Mantri Surakshit Matritva Abhiyan', consider the following statements:
1. This scheme guarantees a minimum package of antenatal care services to women in their second and third trimesters of pregnancy and six months post-delivery health care service in any government health facility.
2. Under this scheme, private sector health care providers of certain specialities can volunteer to provide services at nearby government health facilities.
Which of the statements given above is/are correct?
* Statement 1: Incorrect. The Pradhan Mantri Surakshit Matritva Abhiyan (PMSMA) provides a minimum package of antenatal care (ANC) services only during the second and third trimesters of pregnancy. It does not cover post-delivery health care services for six months. The focus is on ensuring safe pregnancies through early detection and management of high-risk cases. * Statement 2: Correct. Under PMSMA, private sector health care providers (such as gynecologists, radiologists, and physicians) can volunteer to provide free services at nearby government health facilities on the 9th of every month. This public-private partnership enhances access to specialized care for pregnant women.