NPS (National Pension System) is a voluntary retirement savings scheme that allows Indian citizens to save for their future, especially the old age. The scheme was launched by the Government of India in 2004 and later its ambit was expanded in 2009 to include all citizens of India.
The eligibility criteria of NPS have been so designed to make it accessible to all Indian citizens between 18 and 70 years. The most interesting part is even NRIs (Non-Resident Indians) OCIs (Overseas Citizens of India) can participate and invest in this scheme. Therefore, the only criteria that governs eligibility is age and nothing else.
Can I get Rs 50,000 pension per month from NPS?
The NPS calculator is available online and free to everyone. You can easily use it to know what amount you can invest in which mode and calculate the total corpus, monthly pension and lump sum amount that you can get at the age of 60. Let’s see how you can easily get a pension of Rs 50,000 a month by investing a small amount in NPS.
How can I calculate my NPS?
Let a person start an NPS account from the age of 25. Let him/her invest in LC25, which is a code for Conservative Life Cycle Fund (LCF) option in the National Pension Scheme. The equity investment cap is 25% of the total assets, which is applicable to any risk-averse investor.
The calculator will tell you that even with a conservative approach, you can get a monthly pension of more than Rs 50,000 – actually Rs 52,456 – from the age of 60 years. The person has to keep investing till the age of 61. Another assumption is that this person keeps raising his investment by a small 5% every year. Apart from that he/she is also entitled to a lump sum payment of Rs 1,39,88,269 or Rs 1.39 crore. The LC25% is assumed to generate a return of 8.94%.
NPS pension calculation via risker mode
Let’s now see what will happen if the investor keeps investing the same amount through a riskier mode. If he/she invests the same amount Rs 5,000 every month through LC75, the amount of monthly pension payable from 60 years will rise to Rs 63,790 and the lump sum to Rs 1,70,10,709. Incidentally LC75 will attract a template return of 9.93%.
NPS, or National Pension System, is perhaps the most effective long-term financial planning tool that can create financial independence for any Indian, even if he/she is not employed anywhere. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
