National Pension System, popularly known as NPS, is a government scheme. This scheme has been designed by the government to improve the old age of the people. Through this market linked scheme, you can also deposit a good retirement fund for yourself and also arrange for pension at the age of retirement. If you start contributing to this scheme at the age of 35 and deposit Rs 5,000 every month, then how much lump sum amount will you get as retirement fund in old age and how much pension will you get? Know here.
First know about NPS
NPS is a market linked scheme, that is, whatever you contribute in it, its return is decided according to the market. There are two types of accounts in this scheme, Tier 1 and Tier 2. Tier 1 account can be opened by anyone but Tier-2 account can be opened only if you have a Tier-1 account. You can take 60 percent of the total amount invested in NPS in lump sum after turning 60 years old, that is, this amount is your retirement fund in a way. While at least 40 percent of the amount has to be used as annuity. You get pension from this annuity. How much pension you will get depends on your annuity.
How much money will be made on investing Rs 5,000 per month
If you invest Rs 5,000 every month in NPS as per Balanced Lifecycle Fund from the age of 35 and invest continuously for 60 years, then you will have to invest for a total of 25 years. In this case, you will invest a total of Rs 15,00,000. If you get a return of 10%, then you will get Rs 47,17,573 as interest. In this way, your total corpus will be Rs 62,17,573.
How much will be the lump sum and how much will be the pension?
If you invest 40% of this amount in annuity, then you will have to invest Rs 24,87,029 in annuity. In such a situation, at the age of 60, you can take a lump sum of Rs 37,30,544 as retirement fund. If you get a return of 7 percent on annuity, then you can take Rs 14,508 every month as pension.
How much corpus will be formed if you do a top-up of 5%?
If you start investing in NPS at the age of 35 with Rs 5,000 and invest a top-up of 5% every year, you will invest a total of Rs 28,63,626 till the age of 60. If you get a return of 10%, you will get Rs 65,52,837 as interest. In this way, your total corpus will be Rs 94,16,463.
How much retirement fund and how much pension will you get
If you take 60% of this amount as retirement fund and invest 40% in annuity, then you will get Rs 56,49,878 in lump sum. On the other hand, if you invest 40% i.e. Rs 37,66,585 in annuity and get a return of 7%, then every month you will get Rs 21,972 as pension.
What is Balanced Lifecycle Fund?
Balanced Lifecycle Fund (BLC) invests in three major categories such as equity, corporate bonds, and government bonds. In BLC, 50% of the investment is kept in equity till the age of 45 years. After this, as the age of the subscriber increases, the investment in equity gradually decreases. By the age of 55, the investment in equity remains 35% and more attention is given to safe investments like government bonds.
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