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How safe is money invested in National Pension System?

Q. I am 40 years old and work in a private concern. I have invested ₹1 lakh in tier I account in eNPS over the last two years to avail tax benefit. However, the agency managing my eNPS account says that they only maintain the account and don’t advise which fund manager does well.

Could you please advise whether the money invested in NPS is safe and also suggest how I can identify which fund manager is doing well?

Also, how much TDS (tax deducted at source) will be deducted when I take money back from tier II account?

In addition, please suggest if there is complete information/rules about NPS/eNPS that I can access.


A. Please visit to know all the details you need to understand about investing in NPS. Please remember, NPS makes sense from a tax-deduction perspective. But, make sure you also invest your savings across other products such as mutual funds or other market-linked products to diversify and build wealth.

National Pension System (NPS) is a pension-cum-investment scheme from the government to provide post-retirement security. It is a long-term tax-saving and investment vehicle that invests in regulated instruments in equity and debt to generate market-linked returns. Returns are not fixed like provident funds.

NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). National Pension System Trust (NPST), established by the PFRDA, is the registered owner of all assets under NPS. You do not have to worry about the safety of the vehicle. However, since it is a market-linked product, you will need to gear up for volatility when markets don’t perform well in the short to medium term. You also need to ensure that you are with a good service provider who will provide seamless transaction as also the status of your fund performance.

You can look at the performance of NPS schemes here: and also at this online site: Please note that tracking NPS performance is not too different from tracking mutual fund performance. You need consistency in performance over the years rather than go with chart-toppers.

Look at the players who have steadily performed across calendar years and have a reasonable asset size, especially in debt schemes. Since the mandate of the funds and the restriction in terms of investments is narrow, the performance of the funds do not vary much. Make sure you have a manager who is good at both equity and debt. A reasonable corpus size is also desirable in the case of debt.

The taxation on tier II account requires clarity. There is no mention of TDS at this point and taxation at your slab rate on the income from tier II is assumed in the absence of such clarity. Kindly consult a tax expert to know the current status.

(The author is head, MF research

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Readers can send in queries on personal finance and investing to Our experts who write on persinal finance will answer these queries. Moneywise will not give specific recommandations for investment in a particular mutual fund scheme, share or fixed deposit.

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Printable version | Jun 18, 2021 1:25:48 PM |

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