Employed people invest in different schemes to secure their future financially.
Everyone wants that in old age, they do not have to depend on anyone financially.
That’s why people invest a part of their salary during the job.
The government also runs many schemes in which a good fund can be deposited by investing for the long term.
One such scheme of the government is the National Pension Scheme (NPS).
This is the most preferred investment option for creating a retirement fund.
Government related scheme
This scheme is directly linked to the government, and in this scheme, you can get a pension of Rs 50,000 after the age 60 by investing Rs 6000 every month.
You have to invest in this scheme by saving Rs 200 daily. The person investing in this scheme also gets an exemption on income tax.
In NPS, the investor gets an exemption under 80C and an additional income tax exemption of up to Rs 50,000 under 80 CCD.
The amount of the pension depends on the annuity.
NPS is considered a long time investment. In this scheme, you deposit money during the job, which you get as a pension after retirement.
The investor gets the money deposited in NPS in two ways. First, you can withdraw a limited part of the deposited amount in one go.
In contrast, the other part will remain deposited for pension. An annuity will be purchased from this amount.
The more money you leave to buy an annuity, the more pension you will get after retirement.
There are two types of accounts.
Two types of accounts are open in NPS – NPS Tier-1 and NPS Tier-2 (NPS).
The tier-1 account is mainly for those people whose PF is not deposited and want financial security after retirement.
You can open an account by depositing a minimum of Rs.500. After retirement, you can withdraw up to 60% of the amount in one go.
Annuities are bought from the remaining 40 percent amount.
How much is tax exemption available?
The NPS account holder gets an income tax exemption of up to Rs 1.5 lakh under Section 80C and
an additional Rs 50,000 under Section 80 CCD. But you have to pay tax on the income from an annuity.
How to get a 50 thousand rupees pension?
Let us understand how much you will have to invest in getting a pension of 50 thousand rupees every month.
According to the NPS calculator, if someone opens an account in NPS at 24 and starts investing Rs 6,000 every month.
That is, every day, 200 rupees will have to be saved. In this way, he will invest in this scheme till the age of 60 years.
This means he will deposit money in this scheme for 36 years.
Have to buy an annuity
In this way, by the age of 60, he will deposit Rs 25,92,000 as an investment.
Now, if we assume a return of 10%, then the total corpus value will be Rs 2,54,50,906.
Then NPS buys an annuity from maturity income at 40%; the amount will be Rs 1,01,80,362.
Assuming a 10% return on investment, he will get a lump sum income of Rs 1,52,70,544.
In this way, after 60 years, he will get Rs 50,902 as a pension every month.
