Archive · 24 Sep 2026
Why India Should Flip the Corporate Retirement Savings Default
India is discussing how companies help workers save for retirement.
One option is the National Pension System, or NPS.
Under the new tax regime, an employer can contribute up to 14% of a worker’s basic salary to NPS.
These contributions can be tax-free for the employee.
There is a combined yearly limit of ₹7.5 lakh for provident fund, superannuation, and these NPS contributions.
The limit used to be 10% of basic salary.
It was raised to 14%.
The article says this change could encourage a different default for retirement saving in India.
Under Section 80CCD(2), employees under India’s new tax regime can receive tax-free employer National Pension System contributions.
Employer contributions can reach 14% of an employee’s basic salary.
The limit was raised from 10% to 14%, creating a significant structural incentive for retirement saving.
The benefit falls within a combined annual ₹7.5 lakh cap covering provident fund and superannuation contributions.
The article argues that India should reconsider its default approach to corporate retirement savings.
- Who
- Employees and employers in India, particularly those covered by the new tax regime.
- What
- A proposal to reconsider the default for corporate retirement savings, in light of tax treatment for employer NPS contributions.
- When
- The article refers to the current provisions and the increase from 10% to 14%; no specific date is provided.
- Where
- India.
- Why
- The 14% employer-contribution limit creates a tax-supported structural incentive for retirement saving.
- Relevant provision
- Section 80CCD(2), referenced as Section 124 in the Income Tax Act 2025.
- Eligible tax regime
- India’s new tax regime.
- Employer NPS limit
- Up to 14% of basic salary.
- Previous limit
- 10% of basic salary.
- Tax treatment
- Employer NPS contributions can be tax-free for employees within the stated conditions.
- Combined annual cap
- ₹7.5 lakh for provident fund, superannuation, and employer NPS contributions.