Often people are confused about NPS, but here you will get complete information. Along with this, we will also tell you how you can get a pension of Rs 1 lakh every month and how much investment you will have to make for this and how much time will it take?
NPS Scheme: Pension is a source of regular income for people after retirement, but if it is not planned in time, then the pension amount may be less. Therefore, people are often advised to invest timely. 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.
Often people are confused about NPS, but here you will get complete information. Along with this, we will also tell you how you can get a pension of Rs 1 lakh every month and how much investment you will have to make for this and how much time will it take?
What is NPS (National Pension System)?
NPS is a government scheme, which is market linked. In which any government or private sector employee can invest. This scheme has been designed to provide pension after retirement. Under this scheme, tax benefits are available on the contribution of both the employee and the employer. Since this scheme is linked to the market, it provides market based returns. There are many investment options available in NPS.
Rules of NPS
NPS account is portable i.e. it can be operated from anywhere in the country. Under this scheme, 60% of the total deposit can be withdrawn after retirement. The remaining 40% goes into the pension scheme. NPS is operated by the Pension Fund Regulatory and Development Authority (PFRDA). Tier 1 and Tier 2 accounts can be opened under NPS.
Withdrawal rules under NPS
Currently, a person can withdraw up to 60 per cent of the total corpus as a lump sum and the remaining 40 per cent 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 per cent. On the other hand, in active choice, 75 per cent exposure is available in equity till the age of 50. On the other hand, by the age of 60, this exposure remains 5 per cent to 50 per cent. 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 percent
- Pension wealth: Rs 1.62 crore
- Lump sum withdrawal amount: Rs 1.62 crore
- Monthly pension: about 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 pension of about Rs 1 lakh every month.
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