National Pension Scheme : The National Pension System (NPS), regulated by the PFRDA or Pension Fund Regulatory and Development Authority under the PFRDA Act 2013, is an investment scheme. This scheme is designed for pension after retirement. Under NPS, investors’ savings are deposited in a pension fund. Investors’ money is invested in a diversified portfolio of government bonds, bills, corporate debentures and shares by PFRDA regulated professional fund managers.
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Small savings will make life tension free
National Pension System is such a retirement scheme in which by starting investing early and contributing small amounts, adequate pension and corpus can be arranged for retirement. Any Indian citizen (government employee or private sector employee) between the age of 18 and 70 years can open an account in it. NRIs are also eligible for this. After opening the account, one has to contribute till the age of 60 or till maturity. At least 20 years of investment is necessary in this.
Mutual Fund Return: 5 banking funds that compete with the stock market, money increased 5 times in 10 years, 15 to 18% annual growth in SIP
NPS: Build a retirement corpus first
Age to start investing: 21 years
Investment period: 40 years (till age 61)
Investment in NPS every month: Rs 1000
Top up NPS every year : 10%
Total investment in 40 years: Rs 53,11,111
Estimated return on investment: 12% p.a.
Total corpus on retirement: Rs 3,50,44,023 (Rs 3.51 crore)
Total profit: Rs 2,97,32,913 (Rs 2.97 crore)
SIP winners: These 5 large cap funds top the return charts, 18 to 22% annualized return in 11 years, value of Rs 5000 SIP becomes Rs 32 lakh
NPS: Buy annuity for pension
Investment in annuity plan of total corpus: 50%
Pension Wealth: Rs 1,75,22,012 (Rs 1.75 crore)
Lump Sum Value: Rs 1,75,22,012 (Rs 1.75 crore)
Annuity Rate: 8%
Monthly pension: Rs 1,16,800 (about Rs 1.15 lakh)
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NPS: Getting better returns
A part of the amount deposited by you in NPS is invested in equity, so this scheme cannot give guaranteed returns. However, it can still give higher returns than other traditional long term investments like PPF. If we look at the return history of NPS, till now it has given 9% to 12% annual return. In NPS, if you choose aggressive investment option, then the annual return can be 12 to 14 percent. If you are not satisfied with the performance of the fund, then you are also given the option to change your fund manager.
