NPS Calculation: If you also want to create a retirement fund for yourself, then the National Pension System (NPS) can prove to be a better option for you. Through this, you can save tax along with saving for retirement. After this, you can get a hefty pension after 60 years.
NPS Calculation: Regular income and lump sum money on retirement is the need of every person, so that he can spend the rest of his life comfortably. However, planning ahead of time is also necessary for this. If you do not plan it properly, at the right time, then it may be difficult for you to collect a hefty pension and lump sum amount. In such a situation, the National Pension System (NPS) can prove to be better for retirement. Let us first know what is NPS.
National Pension System
The National Pension System (NPS) is an optional retirement savings scheme. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). In this scheme, you can invest regularly during your working age. In this way, at least 40 percent of the accumulated corpus has to be used to buy annuity. Due to which you get regular monthly income.
You can withdraw the remaining 60 percent in lump sum when you retire. The contribution made in NPS is invested by dividing it into debt and equity according to your age and the scheme chosen. Therefore, the return on the investment made in it is not fixed, but market linked.
You can invest in NPS in two ways
Under this scheme, any Indian citizen can deposit money regularly to meet his financial needs after retirement. NPS is run by the Pension Fund Regulatory and Development Authority (PFRDA). Tier 1 and Tier 2 accounts can be opened under NPS. After opening a Tier 1 account, you can open a Tier 2 account. Tier 1 is the primary pension account. There are some restrictions on withdrawals and it is designed for retirement. By investing in it, you can get exemption under Section 80C of the Income Tax Act.
Benefits of investing in NPS
Under Section 80C of the Income Tax Act, you can get a total limit of Rs 1.5 lakh exemption in NPS. Apart from this, you can also take a separate exemption of Rs 50,000 under 80CCD (1B). That is, you can get a total exemption of up to Rs 2 lakh.
How much pension will you get if you invest Rs 5000 per month?
If you invest Rs 5000 every month. Your current age is 18 years and you are an aggressive investor. In this situation, you can get a return of up to 14 percent. If you use 40 percent of the amount to buy annuity, then the total investment will be Rs 25.2 lakh. The gain in this will be Rs 14.7 crore and the total maturity value will be Rs 14.95 crore. In this, you can get a pension of Rs 3.29 lakh per month. In this, if you fall in the 20 percent tax slab, then you can save tax of about Rs 5.04 lakh.
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