Business: Whether you are a salaried person or a professional, a monthly pension after retirement makes you financially independent. You do not have to depend on others for your daily and other needs. The question is how should a private employee or professional plan his retirement so that at the age of 60 he not only has a good lump sum fund but also gets pension every month. National Pension System is one such option which provides monthly pension along with retirement corpus. NPS is the cheapest pension product in the world. Here we will understand with a calculation that if you invest Rs 10,000 monthly from the age of 25, then how much corpus will you have at the age of 60 and how much pension will you get. This calculation has been done with the help of NPS Trust Pension Calculator.
Monthly investment in NPS: ₹10,000
Total contribution till 60 years: ₹42,00,000
Estimated return on investment: 10%
Total amount on maturity: ₹3,82,82,768 crore
Annuity purchase: 40% (₹1,53,13,107 crore)
Lump sum fund: ₹2,29,69,661 crore
Estimated annuity rate: 6%
Pension from age 60: ₹76,566 per month
According to this calculation, if you invest ₹10,000 monthly in NPS over 25 years, you will start getting a pension of ₹76,000 after retirement at the age of 60. Also, you will get a lump sum of ₹2.29 crore. If you take 40 percent annuity (it is necessary to keep this minimum) and the annuity rate is 6 percent per annum, then after retirement you will get a lump sum of Rs 2.29 crore and Rs 1.53 crore will go to annuity. Now from this annuity amount, you will get a pension of about 76 thousand rupees every month. The higher the annuity amount, the higher the pension you will get. The responsibility of investing the amount deposited in NPS is given to pension fund managers registered by PFRDA. They invest your investment in equity, government securities and non-government securities as well as fixed income instruments.
NPS: It is necessary to take annuity
Annuity is a contract between you and the insurance company. According to this contract, it is necessary to buy annuity of at least 40 percent of the amount in the National Pension System (NPS). The higher this amount, the higher the pension amount. The amount invested under annuity is received as pension after retirement and the remaining amount of NPS can be withdrawn as a lump sum. Investments up to Rs 50,000 in NPS are eligible for additional tax deduction under Section 80CCD (1B) of the Income Tax Act. If you have exhausted the limit of Rs 1.5 lakh under Section 80C, you can avail this additional tax benefit.
