National Pension System and Its Role in Long-Term Wealth Creation: Evidence from a Survey-Based Study in Guwahati, India

Abstract

Abstract

This study investigates the National Pension System (NPS) of India and its role in long-term wealth creation, with a focus on subscriber awareness, investment behavior, perceptions, and the influence of demographic factors. Using a descriptive, quantitative research design, primary data were collected from 200 respondents through a structured, close-ended questionnaire employing convenience and snowball sampling. The findings reveal a high overall awareness rate (86%), with 82% of respondents actively investing in the NPS. Government employees constituted the majority of participants (67%), reflecting the institutional integration of NPS within the public sector. Long-term wealth creation (cited by 86.5% of investors) and retirement planning emerged as the dominant motivations for NPS participation. While knowledge of tax benefits under Section 80C was reasonably high, awareness and utilization of the additional deduction under Section 80CCD(1B) remained substantially low, with over 50% of investors not claiming any tax benefit. The Tier I account was perceived as suitable for retirement planning by 74% of respondents, whereas the Tier II account suffered from low awareness and adoption (15%). A Cronbach's Alpha coefficient of 0.747 confirmed acceptable internal reliability of the Likert-scale instrument. Demographic analysis indicated that age (36–45 years), educational attainment (graduate and postgraduate), and employment sector (government) were significant correlates of NPS participation. The study recommends targeted awareness campaigns for private-sector employees and younger demographics, improved communication around tax benefits, and policy-level measures to enhance the attractiveness of Tier II accounts.

Keywords: National Pension System, NPS, long-term wealth creation, retirement planning, tax benefits, Tier I account, Tier II account, investor awareness, PFRDA, India