NPS Retirement Planning: Want Rs 2,00,000 monthly pension from Rs 9,100 starting monthly contribution? Know how it can be achieved

NPS Retirement Planning: Contributions under NPS are tax deductible under subsection 80CCD (1B) of the Income Tax Act. This is over an above the deduction of Rs 1.5 lakh available under section 80C.

Bhawna Gupta | Jan 10, 2025, 05:12 PM IST

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NPS or national pension scheme is a government-backed pension scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). NPS supports financial security in one's working years by enabling individuals to save consistently throughout their services and accumulate a significant retirement fund over time. While retiring from work, NPS provides a combination of one-time lump sum payouts and periodic income.

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Eligibility

The NPS scheme is available for the Indian citizens between 18 years of age to 70 years.

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NPS: Tax benefits

Contributions under NPS are tax deductible under subsection 80CCD (1B) of the Income Tax Act. This is over and above the deduction of Rs 1.5 lakh available under section 80C.

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NPS account transfer

The NPS subscribers are eligible to transfer account across jobs, locations and sectors.

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Flexibility

You can choose your fund manager and asset allocation based on your risk appetite.

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Annuity options

Once retired, it is suggested to invest at least 40 per cent of the corpus into annuities to get a pension.

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NPS partial withdrawal

You can withdraw your money partially for children's education, purchasing home, or medical emergencies.

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How to get more than Rs 2,00,000 pension every month through NPS?

Suppose you start investing Rs 9,100 per month at 25 years of age. You continue this investment for 60 years. Then you will be able to withdraw a monthly pension of Rs 2,00,649 per month.

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What will be annuity purchase?

The estimated annuity value is Rs 3,56,70,928.

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Lump sum withdrawal

The estimated lump sum withdrawal amount will be Rs 5,35,06,391.

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Check calculations

Total investment in 35 years: Rs 1,21,68,678
Total corpus: 8,91,77,319
Annuity amount: Rs 3,56,70,928 (invested 40% in annuity)
Rate of annuity: 6.75%
Annual increase in contribution: 6%
Expected rate of return on investment: 12.1
Expected pension amount: Rs 2,00,649 per month

This is not investment advice. Do your own due diligence or consult an expert for financial planning.

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