Sunday, February 25th, 2024

NPS: How much will have to be contributed for pension of Rs 50,000 per month, know the complete calculation here


Photo:PEXELS NPS

NPS i.e. National Pension System is a government scheme. With its help, salaried people can easily do their retirement planning. The advantage of this scheme is that it can be started from the age of 18 years itself. This gives your money more time to grow and allows you to accumulate a larger corpus for retirement.

Do retirement planning through National Pension System

The National Pension System was started by the Central Government on January 1, 2004. Initially it was only for government employees, but later it was opened for the common people. After this any Indian citizen can invest in this scheme for retirement.

How does NPS work?

NPS is a long term plan. It is run by the Pension Fund Regulatory and Development Authority (PFRDA). Any person between the age of 18 years to 70 years can invest in this. After the age of 60 years, 60 percent of the amount accumulated in NPS can be withdrawn in lump sum. The remaining 40 percent amount has to be invested in annuity. This money is used to give pension. Generally NPS gives returns of 9 to 12 percent.

Tax and other benefits

In NPS, exemption of up to Rs 1.5 lakh is given under section 80C of income tax and exemption of Rs 50,000 under section 80CCD1(B). Its special thing is that the amount received in it is tax free.

How to get pension of Rs 50,000 per month?

According to the NPS calculator, if a 25 year old person contributes Rs 6,531 per month to NPS for 60 years, then he will get a pension of Rs 50,005 per month after 60 years. During this period he will invest Rs 27,43,020 and a fund of Rs 2,50,02,476 will be collected. In this he will get a profit of Rs 2,22,59,456.

(Note: Here the rate of return has been considered as 10 percent.)

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