EPF+NPS Calculations for Rs 8.33 crore Corpus: Rs 32,000 basic pay, DA at 26 years of age? Know how you may generate Rs 8.33 cr retirement fund by 60 years of age
EPF+NPS Retirement Corpus: Are you a 26-year employee with a Rs 32,000 monthly basic pay and dearness allowance (DA)? You may generate a combined retirement corpus of Rs 8.33 crore by 60 years of age by contributing to Employees' Provident Fund (EPF) and National Pension System (NPS) . Know how the plan may work for you!
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05:23 PM IST
EPF+NPS Retirement Corpus: Private sector employees can contribute to Employees' Provident Fund (EPF) and National Pension System (NPS) to generate a retirement corpus and get a monthly pension. If you utilise these opportunities to a good investment limit, you may generate a combined corpus of Rs 8.33 crore by 60 years of age. Not just that, you may also get an estimated monthly NPS pension of Rs 1,40,000 and an estimated Employees Pension Scheme (EPS) pension of nearly Rs 7,300 at retirement. Know how it may be possible –
EPF contribution for employee
EPF is a retirement scheme for private sector employees where they can contribute a minimum of Rs 1,800 a month.
The maximum investment can be 12 per cent of their basic pay and dearness allowance (DA).
The employer also matches the amount and contributes to the employee's EPF account.
The employee gets an 8.25 per cent interest rate compounded monthly on the contribution.
Employer contribution to EPS
The entire employer contribution of up to 12 per cent doesn't go to the EPF account.
Only 3.67 per cent is contributed to EPF; the remaining goes to Employees' Pension Scheme (EPS).
The maximum employer contribution to EPS is Rs 1,250 a month, so the maximum pensionable salary is Rs 15,000.
The employee gets the monthly pension amount, a maximum of Rs 7,500 as per the current rate, at the retirement age of 58.
If they want, they may opt for an early and a late pension at proportionate rates.
The employee can withdraw their EPF corpus at the retirement age of 58.
NPS contribution for employee
A private sector employee can contribute up to 10 per cent of their basic pay and DA to their NPS account.
The employer contribution, which is optional, is a maximum of 14 per cent to the same account.
The amount is invested in a mix of equity and debt, where the equity can be up to a maximum of 75 per cent and debt a maximum of 100 per cent.
NPS withdrawal at retirement
At retirement, the employee can withdraw up to 60 per cent of their retirement corpus. From the remaining 40 per cent, they need to purchase an annuity plan, the return from which will help them get a monthly pension.
Tax benefits on NPS, EPF in new tax regime
In the new tax regime applicable for the financial year 2025-26, an employee can get a tax benefit on the employer's EPF contribution of up to 12 per cent of their basic pay and DA.
In the same regime, they can get a tax benefit on the employer's Tier I NPS contribution for up to 14 per cent of the employee's basic pay and DA.
Calculations for story
For EPF calculation
Basic pay and DA- Rs 32,000
Age- 26 years
Contribution till- 60 years
Per month contribution- 12 per cent of basic and DA
Yearly rise in contribution- 5 per cent
Interest rate- 8.25 per cent
For NPS calculation
Basic pay and DA- Rs 32,000
Age- 26 years
Contribution till- 60 years
Per month contribution (employee)- 10 per cent of basic and DA
Per month contribution (employer)- 14 per cent
Investment mix- Active mode (75 per cent equity and 25 per cent government bonds)
Yearly rise in contribution- 5 per cent
Expected return (pre-retirement)- 12.1
Return from annuity- 6.75 per cent
Lump sum withdrawal- 60 per cent of corpus
Annuity purchase- 40 per cent of corpus
Results
EPF corpus
Total investment- Rs 54,34,762
Total interest- Rs 1,56,40,525
Retirement- Rs 2,10,75,287
EPS pension- Rs 7,285.71
NPS corpus
When employer doesn't contribute
Total corpus- Rs 2,48,64,300
Lump sum withdrawal- Rs 1,49,18,580
Annuity value- Rs 99,45,720
Pension amount- Rs 55,945
When employer contributes
Total corpus- Rs 6,21,60,751
Lump sum withdrawal- Rs 3,72,96,451
Annuity value- Rs 2,48,64,300
Pension amount- Rs 1,39,862
Combined minimum EPF+NPS corpus
Rs 2,10,75,287+Rs 2,48,64,300= Rs 4,59,39,587
Combined minimum EPF+NPS corpus
Rs 2,10,75,287+Rs 6,21,60,751= Rs 8,32,36,038
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
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