New Delhi: The National Pension System (NPS), the Government of India’s flagship pension scheme, launched to provide old-age support in the form of pension to people aged 60 years and above. One needs to invest regularly in NPS until retirement to accumulate a sizeable corpus and receive a lifelong pension. Upon superannuation, the NPS subscriber must use at least 40 per cent of the accumulated corpus to purchase an annuity plan. The remaining 60 per cent of the corpus can be withdrawn. There are numerous other NPS benefits.
How to get a Rs 50,000 pension per month in NPS?
Here’s how one can use the accumulated corpus to get Rs 50,000 pension per month in NPS upon retirement:
The subscriber needs to consider the age at which he would start investing.
The later he starts, the higher SIP would be required and vice-versa.
Subscriber would use at least 40 per cent of his retirement corpus to buy the annuity plan
Expected return on NPS investment throughout the investing period will be 10 per cent
Expected annuity rate of 6 per cent on the plan purchased upon retirement
Considering the above mentioned assumptions, now we will see how much investment will be required age wise. Suppose the investor starts at the age of 30, then, they would be required to invest around Rs 11,000 per month till retirement to get Rs 50,000 pension per month in NPS. They would be able to accumulate a corpus of around Rs 2.5 crore.
While, if he starts just five years later at the age of 35, then a Rs 19,000 monthly investment will be required. At the age of 40, the monthly investment should be Rs 33,000. So, the sooner the better!
How to get Rs 50,000 pension per month in NPS
Starting Age (In Yrs)
NPS Monthly Contribution (Rs)
Duration (In Yrs)
Accumulated Corpus (In Rs Cr)
30
11,000
30
2.5
35
19,000
25
2.5
40
33,000
20
2.5
Assumed Return on NPS investment: 10%
Annuity Plan purchased with 40 per cent of NPS corpus
NPS tax benefits
The following are the benefits of investing in the Centre’s flagship pension scheme:
1. Pension
Upon superannuation, NPS subscribers get the benefit of a lifelong pension. Till the time, the subscriber is alive, they will receive a pension for life from the annuity plan purchased. If the subscriber passes away, then the spouse will get the same pension amount throughout her life.
2. NPS Tax Benefits
NPS subscribers get up to Rs 2 lakh tax deduction benefits every year on investments under the pension scheme. NPS contribution qualifies for up to Rs 1.50 lakh tax deductions under Section 80CCE of the Income Tax Act, 1961. On top of this, the subscriber also gets Rs 50,000 additional tax benefits under section 80 CCD(1B) over and above benefits received under Sect 80CCE.
On top of the Rs 2 lakh tax benefits specified under the above-mentioned 2 sections, the NPS subscriber also gets extra tax benefits on the employer’s contribution. To receive a Rs 50,000 pension per month in NPS, the subscriber needs to consider at what age he would start investing. The later he starts, the higher SIP will be required and vice-versa.
NPS: investment: Considering 10 per cent return on investment at a starting age of 30, a monthly investment of around Rs 11,000 would be required to get Rs 50,000 pension per month in the National Pension System (NPS). Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
