NPS Calculator: National Pension SystemWhich is a government-backed scheme, which aims to provide social security to the citizens India post retirement. This plan allows people to make monthly contributions to save for life after retirement. It was launched in January 2004 for government employees. Later, in 2009, it was opened to all classes. It brings an attractive long-term savings opportunity to effectively plan your retirement through safe and regulated market-based returns.
Who can open NPS account?
A New Pension Scheme Account can be opened by:
– Citizen of India, whether resident or non-resident
Applicant’s age should be between 18 to 70 years as on the date of submission of application and
The applicant must follow the KYC norms prescribed by the scheme
Types of NPS Accounts
Under NPS, there are two types of accounts – Tier 1 and Tier 2. Tier 1 account is primarily meant for retirement savings, where a minimum contribution of Rs 500 has to be made at the time of opening the account. It also includes tax benefits under section 80CCD (1B) of the Income Tax Act, 1961.
NPS Tier 2 is an open-access account. It requires a minimum investment of Rs 1,000, where the customer is free to withdraw his entire amount at any point of time. No tax benefit is available in this account.
How can you get a pension of Rs 1,50,000 per month?
If a person joins NPS at the age of 20 years and starts contributing Rs 6,000 per month till the age of 65 years. The total contribution will be Rs 37.8 lakh. Given the expectation of 10 per cent annualized return, the total investment will increase to Rs 7.39 crore. Now, if the NPS subscriber converts 40 per cent of the corpus into annuity, the value will be Rs 2.95 crore. Assuming an annuity rate of 10 per cent, the monthly pension can be Rs 1.47 lakh. Not only this, the NPS subscriber will get a lump sum amount of about Rs 4.44 crore.
What is the risk in NPS?
Recently, PFRDA made it mandatory for fund managers to give ratings based on the risk level of NPS schemes. The new rules mandate six levels of risk – low risk, low to medium risk, medium risk, medium high risk, high risk and very high risk. Based on the features of the plan, pension funds assign risk levels to E-Tier 1, E-Tier 2, C-Tier 1, C-Tier-2, G-Tier-1, G-Tier-2 and Plan A schemes will do. As per PFRDA circular.
The rating system will help subscribers get a better idea of the risk involved in their investments under NPS. They will be able to take better decisions on the allocation of investments in schemes of different asset classes at the time of enrollment in the scheme and at the time of subsequent contribution to the schemes.
read all breaking news, today’s fresh newswatch top videos And live TV Here.