What Is The Full Form Of CPS In Income Tax?
CPS full form in income tax is Contributory Pension Scheme. It’s also known as the National Pension System (NPS). This system was introduced by the Government to provide people a credible and standard way of saving for their retirement period. It began in 2004 under the administration of the Pension Fund Regulatory and Development Authority (PFRDA). It was only for new government employees to begin with, although, by 2009, every Indian citizen could join. CPS withholds part of the worker’s salary for their pension, and the employer matches the same. This scheme uses a unique 16-digit number called a Permanent Retirement Account Number (PRAN) to track the pension and allows the subscriber to take his pension with him/her if he/she changes job or location.
Who Can Join CPS?
Any central government worker hired after January 1, 2004, can join CPS, but it doesn’t include armed forces. That is to say, even if you worked informally or you were self-employed, you could still become a member. For Tier I account, every member joining is required to save a set part of his or her salary mainly for their retirement that cannot be taken out until they retire.
Fund Management and Investment Choices:
CPS money is looked after by approved Pension Fund Managers (PFMs) watched over by the PFRDA. The people who are part of this scheme can choose from varied investment plans, depending on the quantum of risk they are willing to take. This would include such instruments of investment as stocks, government securities, and fixed-income options. The performance of these investments is regularly checked, and the same is shared with the people who have invested.