Top Reasons to Start Investing in the National Pension System (NPS) in April 2025

​Beginning the new financial year 2025 26, persons wanting a strong retirement can invest in the National Pension System (NPS). A registration of this government backed scheme involves a lot of pros and that involves multiple benefits, allowing this to be a viable long term financial planning. Following are the top reasons to start investing in NPS April 2025:

Leverage the Power of Compounding Early

Making your first NPS contribution at the year’s beginning is more advantageous because your investments will have compounded over a longer period. The main thing is compounding, as it allows your returns to create extra returns, and so on, and it builds your retirement corpus exponentially. Thus, for example, if you invest ₹ 1000 just now with a return of 10% a year, it will multiply over six times in 20 years and become more than 17 times in 30 years. 

Capitalize on Market Corrections

The portion of your investment that NPS allocates to equities has the potential offering higher returns in the long run. For example, beginning your NPS journey in a time of market correction could give you an advantage as you can buy units at a cheaper price and benefit from the upward reactionary of the market. But NPS is a long term investment since one will face multiple market cycles. ​

Avail Additional Tax Benefits

NPS offers attractive tax incentives under the Income Tax Act, 1961. Under Section 80CCD(1), contributions up to ₹1,5,00,000 are deductible, and the further ₹50,000 under Section 80CCD(1B). That is a percentage you can claim up to a maximum of ₹2 lakh annually, thus reducing your taxable income. ​

Flexibility and Low-Cost Structure

Although it does not reward on the basis of market risk or returns, NPS offers flexibility with respect to contribution amount and frequency. They require a minimum of ₹1,000 and you can invest as lumpsum or in periodical instalments. Moreover, the low cost structure of NPS ensures that a higher portion of your investments is utilized for building your retirement corpus instead of going in for other expensive investment options. ​

Option to Migrate to the Unified Pension Scheme (UPS)

From April 1, 2025, subscribers of the National Pension System have an option to shift to the Unified Pension Scheme (UPS). Benefits that the UPS offers are enhanced, and these include guaranteed pension, family pension, and secured minimum pension. The migration process is easy to execute and can be done through the Central Recordkeeping Agency (CRA) portal. ​

Diversified Investment Portfolio

Diversification within various asset classes, including equities, corporate bonds, and government securities by NPS will help to diversify your retirement savings. By diversifying, it can help in balancing risk and return and will meet the risk appetite and investment horizon of different investors. ​

Professional Fund Management

Your NPS contributions are managed by professional fund managers which are appointed by the Pension Fund Regulatory and Development Authority (PFRDA). They try to maximize returns at minimum risk and make it all hassle free for you to invest. ​

Portability and Accessibility

NPS accounts are mobile and you can carry these from jobs and locations. Additionally, the online platform provides easier access to your account whereby you can easily monitor and control your investments. ​

All in all, starting in April 2025, your NPS stands you in good stead to benefit from the power of compounding, market opportunities, the tax incentive, and flexible investment options. therefore, emerges as a complete and optimal tool to plan one’s retirement along with the added advantage of changing to the Unified Pension Scheme.