MONEY
NPS Calculator: The National Pension System (NPS) is one of the popular investment schemes that offer financial security and stability during old age as that is the time when retirees often lack a regular source of income. With life expectancy in India continuously increasing, it becomes more important for individuals to save for their golden years. NPS provides an opportunity for individuals to invest and accumulate savings, which, at the time of retirement, are disbursed as a lump sum and regular income through an annuity plan. The NPS was launched on January 1, 2004. Initially, NPS was implemented for new recruits in government service (excluding armed forces personnel). From May 1, 2009, it was extended on a voluntary basis to all citizens of the country, including workers in the unorganized sector. Through the NPS, the government wants to meet the objective of providing retirement income to all citizens. The pension plan aims to introduce reforms and promote a culture of saving for retirement among citizens. Also read: Pension revisions from 3rd to 7th Pay Commission: Up to 100 pc additional pension for pensioners in THESE age groups! Permanent Retirement Account Number (PRAN): Each subscriber is provided a unique PRAN, which remains valid throughout their lifetime and can be accessed from any location in India . Tier 1 Account: A mandatory retirement savings account with restricted withdrawal options. Tier 2 Account: A voluntary savings account that allows subscribers to withdraw their savings freely. However, no tax benefits are provided on this account. A subscriber is allowed complete 100% lump sum withdrawal if the corpus is less than Rs 5 lakh. If the corpus is more than Rs 5 lakh, at least 40% of the accumulated amount has to be utilised for purchase of an annuity providing for monthly pension to the subscriber and the balance 60% can be withdrawn as lump sum. Also read: 8th Pay Commission Delay: Employees’ Federation plans nationwide agitation in new year – Details inside Here we will understand how much an individual needs to invest per month to get a pension of Rs 1 lakh after on retirement at the age of 60, considering the present age at 30. Target pension per month – Rs 1 lakh Present age of NPS subscriber – 30 years To receive a pension of Rs 1 lakh by investing in an annuity after retirement, the individual must start investing Rs 30,000 per month and continue for 30 years. After 30 years of investment, the NPS subscriber’s total corpus reaches Rs 4.56 crore assuming a reasonable annual return of 10%. Total investment in 30 years – Rs 72 lakh Return on investment – Rs 3.84 crore Total value of investment – Rs 4.56 crore Annuity invested (40%) – Rs 1.82 crore Lump sum withdrawn – Rs 2.74 crore Pension per month – Rs 1 lakh (Expected return of annuity 6%). Also read: Medical Pension for Army Personnel: Centre explains entitlement rules for THESE armed forces pensioners NPS investments are eligible for tax benefits under Section 80CCD(1) within the overall limit of Rs 1.5 lakh as specified under Section 80CCE. Additionally, NPS subscribers can claim an exclusive deduction of up to Rs 50,000 for investments in their Tier I account under Section 80CCD(1B). None
What’s New
Spotlight
Advertisement
Featured News
Latest From This Week
Popular News
