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# NPS Contribution Limit Increase: How much contribution will have to be made on a salary of 50,000

NPS Contribution Limit Increase: During the budget, Finance Minister Nirmala Sitharaman has increased the NPS Contribution Limit from 10% to 14% on the contribution made by employers to the National Pension System (NPS) for employees. What will be its impact on the employed? Understand it through the calculation here.

NPS Contribution Limit Increase: The first full budget of the NDA government was presented on Tuesday, 23 July. In this budget, some changes were also announced in NPS. According to the new rule, under the National Pension System, now employers will deduct up to 14 percent instead of 10 percent from the basic salary of the employees. That is, the salaried people who used to contribute 10% in this scheme till now, will now have to contribute 14 percent. How will this affect them? Let’s understand the calculation on a salary of Rs 50,000.

How much contribution will have to be made on a salary of 50,000

Suppose your salary is Rs 50,000, then now at the rate of 14% you have to contribute Rs 7,000 every month to NPS, whereas earlier you used to contribute Rs 5,000 at the rate of 10%. In this way, an additional burden of Rs 2,000 will fall on you. However, if you look at it from the future point of view, it is beneficial for you, if you contribute more, you will be able to accumulate more corpus on retirement and will also be able to get more pension. However, you may face some challenges in managing the monthly budget because the necessary expenses of the middle class are met from their salary. In such a situation, you may need to manage your expenses.

How much retirement fund will be created and how much pension

If you contribute 14% every month on a salary of Rs 50,000, then how much money will you get on retirement and how much pension will you get at the rate of Rs 7,000? This question is bound to come to mind. Understand it through calculation- Suppose your age is 28 years and your salary is Rs 50,000. You invested Rs 7,000 in this scheme every month at the rate of 14 percent and continued this investment till the age of 60. In this case, your total investment in 32 years will be Rs 26,88,000.

If you calculate according to 10% return, then your total corpus is Rs 1,96,58,348. You get 60% of this amount as retirement fund. In such a situation, 60% of Rs 1,96,58,348 is Rs 1,17,95,008 which you will get as retirement fund at the age of 60. Out of this, 40% i.e. Rs 78,63,340 will go into annuity. If you calculate assuming an annuity rate of 6%, then at the age of 60 you will get Rs 39,317 every month as pension.

Sunil Kumar
Sunil Sharma has 3 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done B.Com in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @sunil.izone@gmail.com
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