Low cost, equity allocation, ₹50K extra deduction. NPS is structurally a great deal — the exit rules are the catch.

NPS is the lowest-cost equity-linked retirement product in India. Fund management fees are 0.09% — a tenth of mutual fund expense ratios. The 80CCD(1B) deduction adds ₹50K of tax relief on top of 80C. For a long-horizon retirement bucket, it's structurally superior to most alternatives. The catch is the exit. At 60, only 60% of corpus is tax-free; the rest must buy an annuity. Annuity rates in India are mediocre — usually 6-7% vs equity's long-term 12%. So NPS makes sense as part of the retirement portfolio, not all of it. Combine with mutual fund SIPs and the math works out cleanly.