NPS 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 Under this scheme, 60 percent of the total deposit can be withdrawn after retirement.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.
These days people are facing losses in the Indian stock market. In such a situation, people are now looking for safe investment options. Where capital is also saved and they also get crores of rupees in the long term. NPS is one such scheme, which is run by the government and can give pension in the long term as well as crores of rupees in lump sum. Let’s understand how?
Under the National Pension System, you get returns on monthly contribution. Any government or private sector employee can start investing in it. This scheme has been designed to give pension after retirement. Under this scheme, tax benefits are also available on the contribution of both the employee and the employer. Due to being linked to the market, market based returns are given under this scheme.
NPS rules
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 Under this scheme, 60% of the total deposit can be withdrawn after retirement.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 are opened under NPS.
NPS withdrawal rules
If you invest in NPS every month, then after retirement i.e. after 60 years, you can withdraw up to 60% of the lump sum amount from this scheme and annuity can be purchased from the remaining 40%. So that after retirement you keep getting pension every month. Under the new NPS guidelines, if the total corpus is Rs 5 lakh or less, then subscribers can withdraw the entire amount without buying an annuity plan. This withdrawal amount is tax free.
Which age is best for investment
For employees of private sectors, those up to the age of 35 years get more exposure to equity. This exposure can be up to 75 percent. On the other hand, in active choice, 75 percent exposure is available in equity till the age of 50. At the same time, this exposure remains 5 percent to 50 percent till the age of 60. In such a situation, if this planning is done at the age of 35, then it can be a better option.
How will crores of rupees be deposited
If you are planning to invest in NPS and your age is 40 years, then you can avail the benefit of pension of Rs 1 lakh till the age of 20 years. However, you will have to invest Rs 20,000 every month in NPS. You can increase the investment by 10% every year. If the estimated return on this is considered to be 10%, 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: 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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