The National Pension Scheme can be a valuable platform for building a retirement fund with high returns. Invest in NPS today and get Rs 2 lakh monthly pension after retirement.
The National Pension System (NPS) is a valuable platform for building a retirement fund with substantial profit potential. With a good plan, investors can aim for a monthly pension of over Rs 2 lakh after two decades of investment. Inadequate retirement savings can lead to financial challenges in one’s post-retirement years, emphasizing the importance of effective planning and diversifying investments, including pension schemes.
NPS is one of the prominent government-sponsored pension schemes, administered by the Pension Fund Regulatory and Development Authority (PFRDA). It is open to all Indian citizens between the ages of 18 and 70 and currently offers annual returns of between 9% and 12%. Taxpayers can avail tax benefits up to Rs 2 lakh per annum under certain provisions of the Income Tax Act, 1961.
How much do you need to invest to get a monthly pension of Rs 2 lakh through National Pension Scheme?
Let’s explore how a person can get a monthly pension of Rs 2 lakh through NPS investment. If an individual starts contributing to it. NPS Scheme At age 40, they will have an investment horizon of 20 years, which will last until their retirement at age 60. To get a monthly pension of Rs 2 lakh after retirement, one must invest Rs 1,30,000 every month for two. The total investment over the decade period would be Rs 3.12 crore, and assuming an annual return of 10 percent, the total profit would accumulate to Rs 6.83 crore. Consequently, after 20 years the total corpus fund will reach around Rs 10 crore.
On maturity of the NPS investment, if 60% of the corpus is withdrawn as a lump sum, it will fetch Rs 5.97 crore. The remaining 40 percent of the retirement corpus, totaling Rs 3.98 crore, can be designated for the annuity option. With an interest rate of 6 percent per annum, this would translate into a monthly pension of Rs 1.99 lakh. Nevertheless, it is advisable to start investing in NPS at an early age, as it allows accumulating a large corpus through small contributions.
First Published: 29 Sep 2023, 10:46 IST
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