National Pension System
NPS Pension Calculation: Every working person has only one fear that when old age comes and the body fails, then how will the household expenses be managed? National Pension System (NPS) is a great way to remove this tension. If you start depositing a little money in it at the right time, then after retirement you can get a pension of more than Rs 44 thousand every month. Also, at the age of 60, you will have accumulated money of more than Rs 1 crore in your hand. Come, let us understand its complete mathematics.
How to get money after 60 years?
The rules of NPS are very simple and easy. Whatever money you deposit in it during your job, it gets divided into two parts when you turn 60. The first part (60 percent of the total fund) is given to you directly in cash. Annuity is purchased for you with the remaining 40 percent money. In simple words, your pension is decided every month by this 40 percent share. To explain this entire calculation, we have assumed that you will get about 10% return on your deposited money and 7% interest on the pension portion. However, NPS is a market-linked scheme. There is no fixed interest rate or guaranteed return in this. Returns may be more or less depending on the performance of the stock market.
The magic of starting over at 25
The biggest rule of saving money is that the sooner you start, the more you will benefit. If a 25 year old youth starts depositing just Rs 5,000 every month in NPS, then by the age of 60 he will have a huge fund of about Rs 1.90 crore. Out of this, he will get Rs 1.14 crore at once and from the remaining money, he will start getting a pension of about Rs 44,300 every month. Even if someone deposits just Rs 2,000 per month, he will easily get a pension of Rs 17,700 in old age. Whereas the pension of those who deposit Rs 10,000 per month can reach Rs 88,700.
How does pension reduce with increasing age?
As age increases, you have less time to accumulate money. Suppose you started depositing Rs 5,000 every month at the age of 30 instead of 25. Then by the age of 60 your fund will become Rs 1.13 crore. In this you will get Rs 67.8 lakh in cash and the pension will be around Rs 26,300 per month.
But if you start investing at the age of 35, then this same Rs 5,000 per month will give you a corpus of only Rs 65 lakh. Then the lump sum amount will be Rs 39 lakh and the pension will be only Rs 15,200 per month. That means, with a delay of just 10 years, your pension gets reduced by more than half.
Who can open accounts in this?
Any Indian between 18 to 70 years can open an account in NPS. Whether you are in a government job, work in a private company, run your own business or are a freelancer, this scheme is for everyone. If you are a central government employee, the government also deposits money into your account on its own behalf. You can deposit money in it every month, every three months or even once a year according to your pocket and convenience.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
