Looking to invest in the National Pension System (NPS) but confused between Tier I and Tier II? Here's the latest 2025 comparison to help you make the right decision for your tax-saving and retirement goals.
| Feature | Tier I | Tier II |
|---|---|---|
| Lock-in Period | Until 60 years | No lock-in |
| Tax Benefit (Section 80CCD) | ✅ Up to ₹2 Lakhs | ❌ No tax benefit |
| Withdrawal Rules | Partial after 3 years, final after 60 | Anytime |
| Exit Tax | 60% tax-free, 40% annuity | Gains are taxable |
| Ideal For | Long-term tax-saving retirement planning | Short-term saving with liquidity |
If you're planning long-term retirement and want tax benefits, go with Tier I. For short-term or flexible investments without tax deductions, Tier II is a better choice.
Tip: You can invest in both Tier I and Tier II to diversify benefits.
🔁 Page last updated: June 3, 2025