NPS Pension Calculator: The National Pension Scheme (NPS) is a government initiative that allows anyone to qualify for a pension through their investments. Thus, if an unemployed individual aims to secure a pension of at least Rs 1 lakh upon retirement, they can easily achieve this by investing in NPS. Additionally, they will receive a lump sum of ₹2.46 crore when they retire. If anyone is interested, they can find the full calculation here.
Discover how much you need to invest each month
According to the NPS calculator, if a 25-year-old begins investing Rs 12,000 monthly today and opts for the Active Choice plan, they can comfortably expect a monthly pension exceeding Rs 1 lakh at retirement. Moreover, after reaching 60, you will receive a lump sum of ₹2.46 crore from the comfort of your home. Let’s examine the calculations. The greatest benefit of starting to invest early is that even small contributions can grow into a significant amount over time.
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NPS Pension Calculator: Understand the complete investment calculations.
Imagine you are 25 years old and plan to retire at 60. You decide to invest Rs 12,000 each month in NPS. You will need to maintain this investment for 25 years.
Age to begin investing: 25 years
Retirement Age: 60 years
Monthly Investment: Rs 12000
What will be your total investment?
If you contribute Rs 12,000 every month, then:
Annual Investment: Rs 12,000 x 12 = Rs 1,44,000
Total investment over 35 years: Rs 1,44,000 x 35 = Rs 50,40,000 (Fifty Lakh Forty Thousand Rupees)
This will be the total amount that will come out of your pocket.
What will the fund amount to?
In NPS, your funds are managed by various fund managers who invest in equities, corporate bonds, and government securities. Assuming an average annual return of 10% (which is subject to market performance and not guaranteed), the estimated total corpus by age 60 would be around Rs 4.10 crore. This illustrates the power of compounding.
You will get a lump sum of Rs 2.46 crore on retirement!
According to NPS rules, at age 60, you can withdraw a maximum of 60% of your total deposit in one lump sum, which is tax-free. 60% of the total corpus: 60% of Rs 4.10 crore = approximately Rs 2.46 crore. You will receive this lump sum upon retirement.
Pension of Rs 1,09,403 per month
The remaining 40% of the corpus ( Rs 4.10 crore – Rs 2.46 crore = Rs 1.64 crore) must be invested in purchasing an annuity. This annuity provides you with a regular pension.
Annuity amount: Approximately Rs 1.64 crore
Estimated annual annuity rate: 8% (This rate is subject to change)
Monthly Pension: (Rs 1,64,00,000 * 6%) / 12 = Rs 1,09,333.33 (approx.)
If you wish, you can also invest more than 40% of the amount in annuity, which will further increase the pension.
