Private sector employees frequently struggle to save a big sum of money for their post-retirement life. Given the inflation, one requires a risk-free investment company that provides a long-term return that exceeds inflation. Among the various products available on the market are fixed deposits, public provident funds (PPF), and the national pension system (NPS).
Designed to enable subscribers to make a defined commitment toward planned savings and so secure the future in the form of a Pension, NPS is a voluntary retirement savings scheme. It is an effort to find a long-term solution to the issue of giving each Indian person a sufficient retirement income.
Benefits of the National Pension Scheme:
The Pension Fund Regulatory and Development Authority is in charge of managing and overseeing the defined contribution National Pension System (PFRDA). Indian citizens get old age security thanks to the pension cum investment system. It offers a convenient way to efficiently organize your long-term savings with a secure, regulated market-based return.
Who is Eligible for National Pension Scheme?
Anyone who is an individual citizen of India and is between the ages of 18 and 70 (as of the application submission date for NPS) is eligible to join. Although it is not permitted for an individual to open more than one NPS account, they can open one NPS account and one Atal Pension Yojna account.
Income Tax Exemption in NPS:
Only NPS subscribers are eligible for an extra deduction for investments up to Rs 50,000 in NPS (Tier I accounts) under paragraph 80CCD (1B). This is in addition to the Rs. 1.5 lakh deduction allowed by Section 80C of the Income Tax Act of 1961.
How to Get a Pension of Rs 2 Lakh per Month Through NPS?
According to an approximate estimate provided by the NPS calculator, someone who starts contributing Rs 5,000 per month to the NPS for 40 years will receive Rs 1.91 crore. If you begin investing at the age of 20, you will receive a lump sum maturity payment of about Rs. 1.91 crores and an annuity value of about Rs. 1.27 crore, which will be reinvested in annuities for a monthly pension. The monthly pension would therefore be Rs. 63,768 if an annuity with a value of Rs. 1.27 crore earned a 6% annual return. Until death, the investor will continue to get Rs 63,768 each month from the annuity.
How to Get a Monthly Pension of Rs 63,768 Through NPS?
You will receive a one-time maturity payment of between Rs. 1.91 crore and Rs. 1.27 crore if you invest the aforementioned sum of money or Rs. 5000 every month, from the time you turn 20 until retirement. A 6 percent estimated return on Rs. 1.27 crore would be Rs. 63,768 per month.
