New Delhi: Planning for National Pension System (NPS) investment. The thumb rule is to start at an early age to get higher pension upon retirement. If you start later, the pension amount will be lower. However, if you start early, the total amount you would invest throughout NPS investment period will be lower and the NPS corpus you would accumulate would be higher.
Also read: ICICI Pru Opportunities Energy Fund NFO Details
NPS calculator: Rs 5,000 monthly deposit for 35 years
Suppose you can invest only Rs 5,000 per month in NPS. If you start NPS investment at the age of 25 with just Rs 5,000 monthly deposit, you will will be able to build a corpus of Rs 1.91 crore at the time of retirement. On assumption, the NPS scheme in which you invest in fetches average return of 10 per cent over the course of 35 years and the annuity plan you buy would generate return of six per cent, then, you will get Rs 38,000 per month pension upon retirement. Over the course of the total NPS investment tenure of 35 years, you will invest only Rs 21 lakh.
Rs 5,000 SIP for 30 years in NPS
Now, suppose you start late at the age of 30. You are capable of only Rs 5,000 monthly investment over the course of entire NPS investment period and you want to retire at the age of 60. At 10 per cent assumed rate of return, you will be able to build a corpus of only Rs 1.13 crore. The pension you would get after retirement would also be lower. You would get only Rs 22,000 per month pension.
Rs 5,000 SIP for 20 years in NPS
If you start at the age of 40, you will be able to accumulate even more lower corpus of Rs 38 lakh at retirement. Plus, the pension amount will also be lower at Rs 7,657 per month. This is considering you choose to retirement age at 60. After 20 years, the value of this pension would also be lower. You would find it difficult to suffice for your living. So, if you have less amount of money for SIP, then, it becomes even more essential that to start investing for retirement even more earlier.
Also read: Are senior citizens liable to pay tax on pension, retirement benefits?
Rs 5,000 SIP for different duration in NPS:
Starting Age (In Yrs)
NPS Monthly Contribution
Duration (In Yrs)
Accumulated Corpus (In Rs Cr)
Invested Amount (In Rs)
Pension (Per Month in Rs)
25
5000
35
1.91
0.21
38000
30
5000
30
1.13
0.18
22000
40
5000
20
0.38
0.12
7657
*NPS Subscriber uses 40 per cent of NPS corpus for annuity plan
*Assumed Return on NPS investment: 10%
*Annuity Plan Assumed Return: 6%
Rs 5,000 SIP for 35 years in NPS would give you an expected pension of Rs nearly Rs 40,000. NPS is a market-linked voluntary contribution scheme that helps you save for your retirement. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
