Investment Scheme: If your salary is Rs 1 lakh at the age of 40, then how can you arrange for the same pension after retirement..

National Pension System (NPS): Vinod, who works in a private company, is 40 years old and his salary is also around Rs 1 lakh. With this income, his house is running well, but he has made a mistake in that he has not planned anything for his retirement till now. Seeing others planning for a pension from a young age, he feels that it is necessary to think about how his expenses will be met after retirement and start investing.

NPS is the solution to remove this tension

The answer to Vinod's worry is the National Pension System (NPS). If he invests properly in this scheme, then in the next 20 years, after retirement, he will be able to arrange a pension of Rs 1 lakh per month and a corpus of at least Rs 1 crore. We will tell you the calculation of how this work can be done later, but before that let us get basic information about NPS.

What is the meaning of NPS?

National Pension System (NPS) is an investment scheme. This scheme is designed for pension after retirement. It is being regulated by the Pension Fund Regulatory and Development Authority under the PFRDA Act 2013. Under NPS, the savings of investors are deposited in the pension fund.

Any Indian citizen between the age of 18 and 70 years can open an account in NPS. Be it government employees or people working in the private sector, everyone can take advantage of this scheme. Even Non-Resident Indians (NRIs) are eligible for this. After opening the account, contributions have to be made till the age of 60 or maturity.

At the time of retirement, at least 40% of the amount deposited in the NPS account has to be invested in an annuity through a registered annuity service provider (ASP), and the remaining 60% amount can be withdrawn in a lump sum. If the investor wants, he can invest more than 40% of the amount in an annuity as per his need. In return for the investment made in an annuity, the investor gets a fixed amount every month as a pension.

Calculation of Rs 1 lakh pension through NPS

Age to start investment: 40 years

Investment period: 20 years (till the age of 60 years)

Investment in NPS every month: Rs 20,000

Step up in investment after every year: 10%

Total investment in 20 years: Rs 1,37,46,000

Estimated return on investment: 10% annually

Total corpus: Rs 3,22,90,815 (about Rs 3.23 crore)

Total benefit: Rs 1,85,44,815 (Rs 1.85 crore)

Total tax saving: Rs 41,23,800

After a corpus of about Rs 3.23 crore is accumulated through investment in NPS, half of it will have to be invested in annuity for pension on retirement, while the remaining half will be received as a lump sum.

Investment of pension wealth in annuity plan: 50%

Return on annuity: 8%

Amount invested in an annuity: Rs 1,61,45,407.5 (Rs 1.61 crore)

Lump sum withdrawn: Rs 1,61,45,407.5 (Rs 1.61 crore)

Monthly pension: Rs 1,07,636 (Rs 1.07 lakh)

By investing in this way, you will get a lump sum fund of Rs 1.61 crore when you retire at the age of 60. At the same time, you will start getting a pension of about Rs 1 lakh every month.