NPS Calculation: Private sector employees can also opt for NPS for monthly pension after retirement. This is a regulated contributory pension plan.
NPS Scheme: At the age of retirement, the private sector employees can easily arrange monthly pension. Private jobseekers often delay retirement planning. However, the National Pension System is an option that can be joined sooner or later. This is a contributory pension plan. This is a better pension plan for long-term investment goals. A large lump sum fund is available on retirement by investing in NPS. Also, on the basis of your annuity amount and its performance, you get monthly pension.
NPS Calculator: If you start investing in 35 years
If a person starts investing in 10,000 monthly NPS at the age of 35, then by the age of 60 years i.e. 25 years you will have to invest. With the NPS calculation, understand how much your retirement corpus will be and what will be the estimated monthly pension.
Monthly investment in NPS: Rs 10,000 (Rs 1,20,000 p.a.)
Total contribution in 25 years: Rs 30 lakh
Estimated return on investment: 10%
Total corpus at maturity: Rs 1.33 crore
Annuity purchase: 40%
Estimated annuity rate: 6%
60 Pension at age: Rs 26,758 per month
(Note: This calculation has been done on the NPS calculator. The figures for pension and funds are approximate. Actual figures may vary.)
1.33 crore fund at the age of 60?
In NPS, if you take 40 per cent annuity (minimum that is required to be kept) and the annuity rate is 6 per cent per annum, then after retirement you will get a lump sum of Rs 80.27 lakh and Rs 53.51 lakh will go into annuity. The total corpus will be Rs 1.33 crore. Now from this annuity amount, you will get a pension of Rs 26,758 every month. The higher the annuity amount, the higher the pension you will get.
Annuity is actually a contract between you and the insurance company. Under this contract, it is necessary to buy an annuity of at least 40 percent of the amount in the National Pension System. The higher the amount, the higher will be the pension amount. The amount invested under annuity is received in the form of pension after retirement and the balance amount of NPS can be withdrawn in a lump sum.
NPS: Cheapest Pension Plan
Certified Financial Planner Taresh Bhatia says that any Citizen of India can join NPS. NRIs cannot invest in this. NPS can be availed online-offline. You can take it through the bank. Very flexible and easy to use. NPS is a highly regulated and low cost scheme. This is the cheapest pension plan in the world. It takes only 0.1 percent charges. Power of compounding also benefits.
He says that there are some limitations regarding NPS. As point of purchase is bank and online, it is not user friendly yet. No one of yours will come and open the account. Will not give you any form. You have to do it yourself online. If you want to lock in retirement funds, then this is a good way.
