Update: Krishnan Muthusubrmanian pointed out a flaw in my analysis. The case for not invested in NPS is much stronger. Apologies for the inconvenience.
After budget 2015, the following tax deductions are applicable to the National Pension Scheme.
(1) An individual can invest a maximum of Rs. 1.5 Lakhs in Tier 1 for tax decuction under Section 80CCD(1) which is part of 80C.
The employers contribution falls under 80CCD(2) and is sepearate from the 80C limit of Rs. 1.5 Lakhs. There is a misconception that there is no limit for tax deduction under this section. This is not true.