The quest for a dependable pension scheme that offers both one-time payment at retirement and monthly pension is a universal quest spanning the developed and developing economies.
Only Rs 167 a day
Let’s assume a 18-year-old starts investing from the first month after turning 18 and continues till 75 – a duration of 57 years. If this person contributes Rs 167 a day, the total amount he/she contributes would come to Rs 5,000 a month. You would be surprised to know the amount of pension and one-time payment NPS would give you with this rate of investment.
If the investment is continued without any disruption, the subscriber would be entitled to a monthly pension of nothing less than Rs 3,51,978 and a one-time payment of Rs 10.55 crore. The pension would begin from the age of 60. You would receive the lump sum at that age only.
Annuity floor rate
The assumption is that you buy annuity with 40% of the sum accumulated. If you raise it to 50% of the amount, the pension will become Rs 4,39,973 as monthly pension. But the one-time payment would come down to Rs 8,79,94,588 (Rs 8.79 crore).
Rs 200 a day
If you can raise the Rs 167 a day to Rs 200 a day, NPS will give you a pension of Rs 4,22,374, and a one-time payment of Rs 12.67 crore. This assumes annuity as the rate of 40% of the corpus and taking the rest 60% as one-time payment.
Even if you start at 30
If one starts at 30 years and invests Rs 5,000 a month for the full period, NPS would give him/her a pension of Rs 1,29,260 and a one-time payment of Rs 3.87 crore. This assumes a purchase of annuity with 40% of the corpus.
If this person invests Rs 6,000 a month, he/she will get back Rs 1,55,112 as pension and Rs 4.65 crore as one-time payment. This assumes a purchase of annuity with 40% of the corpus.
Assumptions
In all the above instances, the return on investment assumed for the monthly contributions made by the investor would be 10%. The rate at which the annuity would generate returns is 6%.
The National Pension System is a contributory investment-retirement instrument for middle-class people. It offers capital appreciation as well as income tax benefits. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
