People are often advised to invest on time. If your goal is to get a large amount as pension, then the government’s NPS scheme can be best for you, which can give you a pension of Rs 1 lakh or more every month after retirement.
MPS Calculation: Every person needs a regular income and a lump sum amount on retirement so that he can spend the rest of his life comfortably. However, planning for this is also necessary ahead of time. If you do not plan it properly and at the right time, then you will not be able to collect a hefty pension and a lump sum amount.
Therefore, people are often advised to invest on time. If your goal is to get a large amount as pension, then the government’s NPS scheme can be the best for you, which can give you a pension of Rs 1 lakh or more every month after retirement.
Know the rules of NPS
NPS means National Pension System, in which the account is portable, that is, it can be operated from anywhere in the country. Under this scheme, 60 percent of the total deposit can be withdrawn after retirement. The remaining 40 percent goes into the pension scheme. NPS is run by the Pension Fund Regulatory and Development Authority (PFRDA). Tier 1 and Tier 2 accounts can be opened under NPS. Tier 2 account can be opened only after opening a Tier 1 account.
Withdrawal rules under NPS
Currently, a person can withdraw up to 60% of the total corpus as a lump sum and the remaining 40% is given as annuity pension. Under the new NPS guidelines, if the total corpus is Rs 5 lakh or less, subscribers can withdraw the entire amount without buying an annuity plan. This withdrawal amount is also tax-free.
At what age should one start investing in NPS?
Talking about private sector employees, those up to the age of 35 get more exposure to equity. This exposure can be up to 75%. On the other hand, in active choice, 75% exposure is available in equity till the age of 50. On the other hand, by the age of 60, this exposure remains 5% to 50%. In such a situation, if this planning is done at the age of 35, then it can be the best option.
How to get pension of Rs 1 lakh?
If you are planning to invest in NPS and your age is 40 years, then you can avail pension of Rs 1 lakh till the age of 20. However, you will have to invest Rs 20,000 every month in NPS. You can increase the investment by 10 percent every year.
If the estimated return on this is considered to be 10 percent, then after 20 years, you will have a total investment of about Rs 3 crore 23 lakh. The total amount as return will be Rs 1.85 crore and the total investment will be Rs 1.37 crore. The total tax saving on this will be Rs 41.23 lakh. Now you will have to buy annuity for pension.
Investment of pension wealth in annuity plan: 55%
Annuity rate: 8%
Pension wealth: Rs 1.62 crore
Lump sum withdrawal amount: Rs 1.62 crore
Monthly pension: around Rs 1 lakh
By planning and investing in this way, you will get a lump sum fund of Rs 1.62 crore. At the same time, you will start getting a pension of around Rs 1 lakh every month.
