The government changed the pension system in 2004 by replacing the Old Pension Scheme (OPS) with the New Pension Scheme (NPS). After years of opposition from employees, the government recently introduced the Unified Pension Scheme (UPS). However, NPS remains a great investment option for private-sector employees. In the NPS, government employees must contribute 10% of their basic salary. By investing in NPS, anyone can secure a pension after retirement. But the main question is: how much should you invest today to get a good pension after retirement?
In this article, we will explain simple steps to help you secure ₹1 Lakh monthly and enjoy a comfortable old age.
About NPS Scheme
The National Pension Scheme (NPS) helps individuals save for their retirement. Operated by the Pension Fund Regulatory and Development Authority (PFRDA), part of the money invested in NPS is directed toward the stock market, meaning returns depend on market performance. Initially, the scheme was available only for government employees, but since 2009, it has been open to everyone. Its primary objective is to encourage people to develop the habit of saving for retirement.
How Much to Invest for ₹1 Lakh Monthly Pension?
NPS contributions depend on individual preferences. By depositing money during your working years, you can build a significant retirement corpus. Here’s what you need to know to secure a ₹1 lakh monthly pension:
- Starting Age: Begin at age 35.
- Investment Growth: Increase investments annually by 10%.
- Retirement Age: Plan for 60 years.
Two Scenarios:
- 60% Annuity Allocation: Contribute ₹17,000 per month.
- 40% Annuity Allocation: Contribute ₹34,000 per month.
In both cases, the monthly post-retirement income will be ₹1 lakh (NPS Calculator).
Who Can Invest in NPS?
- Any Indian citizen aged between 18 and 70 years is eligible for NPS.
- It is ideal for individuals looking for a financially secure retirement and tax savings.
Key Benefits of Investing in NPS
- Flexible Options: Choose investment plans tailored to your needs.
- Financial Security: Ensure regular income after retirement.
- Portable Account: Transfer your account wherever you work or live.
- Low Management Fees: Enjoy low-cost fund management and compounding benefits.
- Online Convenience: Manage your NPS account easily online.
- Transparency: Investments are monitored by PFRDA for accountability.
Tax Benefits
NPS provides attractive tax-saving opportunities:
- Exemption of up to ₹1.5 lakh under the Income Tax Act, 1961.
- Additional tax deduction of ₹50,000 under Section 80CCD.
Disclaimer: Times Bull will not be responsible for any financial investments made, as it is entirely your responsibility. Please consult a financial advisor for better results.