Corporate NPS: Making your working years work towards retirement

 Your salary may arrive every month, but by the time it does, it already has several places to go. Rent or EMIs, groceries and bills, family expenses. Perhaps a home you are saving for, your child’s education or the next big milestone. With so many priorities competing for today’s income, retirement can easily become the goal that gets pushed to tomorrow.

Not because it matters less. Simply because it feels farther away. That is where your workplace can play a role. If your organisation offers the National Pension System (NPS) under the Corporate Model, retirement investing can become part of your working life, built into the way you plan for the future, rather than left to whatever you manage to set aside at the end of each month.

Under Corporate NPS, an employer can offer NPS as a retirement benefit to its employees. Contributions can come from the employer, the employee or both, depending on the organisation’s policy. This means retirement savings can include an employer contribution alongside what the employee contributes.

Consider an employee whose Basic + DA is ₹1 lakh a month. If their employer's NPS policy provides a 10% employer contribution, that would mean ₹10,000 a month, or ₹1.2 lakh a year , being contributed by the employer towards the employee’s NPS account, before considering market-linked returns. If the employee contributes as well, both contributions can add to the employee’s retirement corpus.

There can also be a tax dimension to the employer contribution. Under Section 80CCD(2), eligible employer contributions to NPS qualify for a deduction, subject to the applicable conditions and limits. For employees under the new tax regime, the deduction limit is up to 14% of salary. Under the old tax regime, the limit is 10% of salary for employees of non-government employers such as companies and PSUs.

For an employee, therefore, an employer contribution can add to retirement savings while also providing a tax deduction under Section 80CCD(2), where the applicable conditions are met. The actual tax benefit will depend on the employee’s circumstances and the applicable tax regime.

The benefit becomes more meaningful when viewed across a career. An NPS account is portable across employment and geographical locations, allowing a subscriber to continue with the same PRAN when changing jobs rather than starting their retirement savings journey again. If the new employer has adopted NPS, the existing PRAN can be tagged to the new employer. Alternatively, the subscriber can continue the account under the applicable NPS framework.

NPS is also a market-linked retirement framework. Contributions are invested by the Pension Fund according to the investment choices applicable to the subscriber, including the selected Pension Fund and asset-allocation approach. In the Corporate Sector, these choices may be exercised by the employer or, where permitted, by the employee.

The long-term nature of NPS means that the retirement journey is not about responding to every short-term market movement, but about investing within the applicable NPS framework over the working years.)

Within this journey, ICICI Pension Fund Management Limited brings professional fund management to NPS. As a PFRDA-registered Pension Fund, it manages subscribers' pension wealth in accordance with the applicable investment guidelines and regulations, allowing employees to focus on their careers and financial priorities while their retirement investments are professionally managed.

Your salary already works hard for the life you are building today. Corporate NPS can help make a part of that working life count towards the one you want after your paycheques stop. Because a workplace benefit can be more than something you receive today. It can also become part of the financial foundation you build for tomorrow.