NPS Retirement Planning: How to get over Rs 50,000 pension every month through this government scheme
NPS Retirement Planning: National Pension Scheme subscribers can operate their accounts from anywhere, even if they change cities or jobs.
National Pension System (NPS) is an easily accessible, affordable, tax-efficient, and flexible voluntary retirement savings plan. Under NPS, the person contributes to his retirement account, and his employer can additionally contribute to the individual's account for his security and social welfare.
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Features of NPS
Let's take a look at the features of NPS and how one can get more than Rs 50,000 pension every month through this government scheme.
How much one can invest in NPS?
An NPS can be opened with a minimum of Rs 100. As per convenience, you get the option to deposit money every month or annually.
Benefits of NPS: Tax benefits
Tax deduction up to 10% of salary (Basic + DA) under section 80 CCD(1) within the overall ceiling of Rs. 1.50 lakh under Sec 80 CCE.
Tax deduction
Tax deduction up to Rs 50,000 under section 80 CCD(1B) over and above the overall ceiling of Rs. 1.50 lakh under Sec 80 CCE.
Tax benefits on investment in NPS Tier-II account
No tax benefits are available on contributions made in an NPS Tier-II account.
No tax rebates/special treatment for the gains arising out of investment in NPS Tier-II. The taxation as per the marginal tax rate will apply to you.
Voluntary contributions
Employees can voluntarily contribute up to Rs 50,000 to their NPS Tier I account and claim a tax deduction under section 80 CCD 1(B).
Portability
Subscribers can operate their accounts from anywhere, even if they change cities or jobs.
Long-term investment
Subscribers can invest in the NPS until they are 65 years old.
How to get over Rs 50,000 pension every month through NPS
Suppose you start investing Rs 5,000 per month at 36 years of age. You continue this investment for 58 years. Then you will be able to withdraw a monthly pension of Rs 50,000 per month.
Know calculations
Total investment in 22 years: Rs 33,27,405
Total corpus: 89,89,027
Annuity amount: Rs 75,50,782 (invested 84% in annuity)
Rate of annuity: 8%
Annual increase in contribution: 8%
Expected rate of return on investment: 10%
Expected pension amount: Rs 50,339 per month