EPF+NPS Retirement Calculations: Age 28, basic pay and DA Rs 36,000? Here's how to get Rs 5.50 cr corpus; Rs 1.45 lakh monthly pension benefits at 60

EPF is a mandatory retirement scheme for private sector employees working in an organisation that is a part of Employees' Provident Fund Organisation (EPFO). A monthly amount is deducted from the employee's salary to invest in EPF. They get an 8.25 per cent interest rate compounded yearly on their investment. The organisation also matches the same amount to contribute.

The minimum contribution a month is Rs 1,800, which is possible if the employee's basic salary and DA is Rs 15,000. On the other hand, the maximum is 12 per cent of the employee's basic pay and DA. 

The employer can contribute up to 12 per cent of the employee's basic pay and DA, but not all of their amount goes to the employee's EPF account. Only 3.67 per cent goes to the employee's EPF account; the remaining 8.33 per cent goes to the employee's Employees' Pension Scheme (EPS). The maximum monthly contribution in EPF is Rs 1,250. If the 8.33 per cent amount is more than that, the remaining amount will add to the employer's EPF contribution. 

An employee can get a tax benefit on employer contributions of up to 12 per cent of their basic pay and DA. There is no tax benefit on the employee contribution.

Like a government sector employee, a private sector employee can also open a Tier I NPS account. While the employee contribution is 10 per cent of their basic pay and DA, the employer contribution is up to 14 per cent. 

Suppose if a person gets Rs 50,000 basic pay and DA every month; they can take up to Rs 6,000 in monthly EPF tax benefits and up to Rs 7,000 in monthly NPS tax benefits. 

Age- 28 Retirement age- 60 years Basic pay and DA- Rs 36,000   NPS employer benefit (p.m.)- Rs 5,040 (14 per cent of basic pay and DA) NPS employee contribution- Rs 3,600 (10 per cent of basic pay and DA) NPS return- 12 per cent (estimated) at active scheme with 75 per cent equity and 25 per cent debt selection NPS annuity return- 7 per cent (estimated) Lump sum withdrawal- 60 per cent Annuity purchase- 40 per cent

EPF employer benefit (p.m.)- Rs 1,321 (3.67 per cent of basic pay and DA) EPF employee contribution- Rs 4,320 (12 per cent of basic pay and DA) Annual increment in EPF, NPS contribution- 5 per cent. EPF return- 8.25 per cent

Employee contribution in 32 years- Rs 41,50,505 Employer contribution in 32 years- Rs 12,69,361  Total tax benefit- Rs 12,69,361  Total corpus generated at retirement- Rs 1,95,66,629   EPS pension p/m- Rs 7,500 maximum

Total NPS contribution in 1st year- Rs 1,03,680 (Rs 60,480 employer contribution, Rs 43,200 employee contribution)  NPS contribution (employer)- Rs  45,54,073.20  NPS contribution (employee)- Rs  32,52,909.43 

Total NPS contribution in 32 years- Rs 78,06,983

Total corpus generated- Rs 5,88,93,159 Lump sum withdrawal- Rs 3,53,35,895  Annuity purchase- Rs 2,35,57,264 Expected monthly pension- Rs 1,37,417

EPF retirement corpus+ NPS lump sum= Rs 1,95,66,629+Rs 3,53,35,895= Rs 5,49,02,524

EPS pension+ NPS pension= Rs 7,500+Rs 1,37,417= Rs 1,44,917

EPF employer contribution in 32 years+NPS employer contribution in 32 years= Rs 45,54,073.20+Rs 12,69,361= Rs 58,23,434.2