When the National Pension System, or NPS, was designed, the planners took care to see that the maximum gains devolve to those who would start investing from an early age. But they also took care to ensure that those who might wake up to the need for investing to plan retirement fairly late, should also not be deprived. Let’s have a look at how NPS achieves it for someone who starts investing in it after reaching 40. Soon the government is going to introduce NPS for kids as they did years earlier with the Public Provident Fund or PPF.
NPS Calculator: Monthly contribution of Rs 5000
The projection of benefits can be easily done with the help of the NPS calculator. It tells us that if anyone starts investing Rs 5,000 in the account from the age of 40, he/she will be entitled to a monthly pension of Rs 38,283.
This payment of this pension will start from the age of 60. This amount will be payable if the subscriber wants to reserve only 40% of the accrued amount as a pension.
If the annuity is raised to 60%
He/she can take up to a maximum of 60% as a pension, which will get him/her a bigger amount. With 60% reserved for annuity, the pension will run up to Rs 57,424.
Now let’s increase the monthly contribution to NPS gradually and see what the pension amounts to. If the subscriber puts in Rs 6,000 a month, he/she will get Rs 45,939 as pension. This assumes that 40% of the corpus is reserved for annuity.
Buying annuity with 50-60%
If the annuity is raised to 50%, the pension becomes Rs 57,424. And if the annuity is raised to the level of 60%, the monthly pension to be paid from 60 years, turns out to be Rs 68,909.
Let our contributor increase the monthly contribution to Rs 7,000. In this instance, the amount of pension payable from 60, will rise to Rs 53,596 with only 40% of the corpus reserved for purchasing annuity.
With 50-60% for annuity
Now, if he/she decides to buy it with 50% of the corpus, the pension will jump to Rs 66,995. If he/she pushes the annuity to 60% of the accumulated corpus, the amount will become Rs 79,054.
Designed to pave the way for universal pension possibilities, the NPS packs in significant pension possibilities, even if at somewhat of a later stage in life. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
