: NPS CalculatorWith the government adding more features and benefits to the National Pension System (NPS), the saving-cum-retirement scheme is becoming more popular among the people day by day. NPS is a market linked defined contribution scheme aimed at saving for retirement. Initially, this scheme was launched for government employees as part of pension reforms and to help people develop the habit of saving to meet their post-retirement needs. From May 2009, the NPS scheme was opened to all the people of the country.
NPS is a cost-effective investment option for people who want to build a large retirement fund. Investments in NPS are tax-free up to Rs 1.5 lakh in a financial year under Section 80C of the Income Tax Act. Apart from this, this scheme also provides tax exemption under Section 80CCD (1B) on an annual investment of up to Rs 50,000. In this way, investors can avail a total tax exemption of up to Rs 2 lakh in a year by investing in NPS. This scheme is available to all citizens.
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As the inflation rate is increasing every year, the value of money is decreasing year after year. Amidst these concerns, NPS subscribers who want more retirement fund must be wondering how much money they need to invest in the scheme to get a monthly pension of Rs 1 lakh. If you are also such an NPS subscriber, then you can understand it with an example here.
How much should one invest in NPS to get Rs 1 lakh pension every month?
To get a pension of Rs 1 lakh per month after retirement through NPS investment, have a look at the calculation given below.
NPS: How to get pension of Rs 1 lakh
Age to start investing in NPS: 30 years
Monthly investment in NPS: Rs 10,000
Total investment in 30 years: Rs 36 lakh
Estimated return on investment: 10 per cent per annum
Total corpus after 30 years: Rs 2,27,93,253 (2.28 crore)
Note- Let’s assume that someone joined the scheme at the age of 30 and started investing Rs 10,000 every month. If the estimated return on his investment is 10 percent per annum, then the total pension wealth after 30 years is around Rs 2.28 crore. Of this, at least 40 percent must be invested in annuity plan. Here we have done the calculation at 55 percent.
Investment in annuity plans: 55 per cent
Annuity return: 10%
Lump Sum Value: Rs 1,02,56,964 (1.02 crore)
Monthly Pension: Rs 1,04,469 (Rs 1 lakh)
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Who can invest in NPS?
National Pension System is a pension scheme of the Central Government, in which investments are made keeping retirement in mind. Any Indian citizen (government employee or private sector employee) between the ages of 18 and 70 can open an account in the National Pension System.NRIs are also eligible for this.After opening the account, one has to contribute till the age of 60 or till maturity i.e. till the age of 70. If we look at the return history of NPS, till now it has given 8% to 12% annual return.
What are the benefits of NPS
NPS is an investment option to build a big retirement fund.
Under Section 80C of the Income Tax Act, one can get tax exemption on investment up to Rs 1.5 lakh in a year and separately up to Rs 50,000 under Section 80CCD (1B), i.e. a total of Rs 2 lakh.
Flexible investment modes cater to diverse investor preferences.
Portability is a very special feature that allows investors to transfer funds based on job and location.
Regulated and transparent management under the supervision of PFRDA.
There is a facility to manage the funds at low cost and one also gets the benefit of compounded returns in NPS.
It is very easy to monitor. There is online access to easily manage and monitor the funds.
