National Pension System:
The scope of the National Pension System (NPS) is gradually increasing. The National Pension Scheme (NPS) was launched in January 2004 for government employees. It was opened to all categories of people in 2009. Any person can contribute regularly to the pension account during his working life. He can also withdraw a portion of the money collected at one go and use the remaining amount to get a regular income after retirement.
The facility of opening 2 types of accounts is available in the National Pension System (NPS). The tier-1 account is a pension account. At the same time, Tier-2 account is a voluntary savings account. NPS subscribers who have Tier-1 account can open Tier-2 account. For this, offline or NPS portal can be used.
- Central government employees
- state government employees
- private-sector employees
- common citizens
Understand with NPS calculator
We have considered the average age of the investor here as 30 years. At the same time, a monthly contribution of Rs 5000 has been made as base. If you join the scheme from the age of 30, then you will have to invest in it till the age of 60 years i.e. 30 years.
Monthly Investment in NPS: Rs 5000 (Rs 60,000 annually)
Total Contribution in 30 years: Rs 18 Lakh
Estimated Return on Investment: 8%
Tax Saving: 5.4 Lakh
Total Amount on Maturity: Rs 74.21 Lakh
Annuity Purchase: 40%
Estimated Annuity Rate: 8%
Maximum Tax Free Withdrawal: 60% of Maturity Amount
Pension at the age of 60: Rs. 19790 per month
One time lump sum: 44.52 Lakh
(Note: Here we have done a calculation on NPS calculator to buy an annuity with 40% amount. It is necessary to buy 40% annuity.)
How to open an NPS account?
Take a Subscriber form from your nearest PoP and submit it with KYC papers. Once you make the initial investment (Rs 500 or Rs 250 monthly or not less than Rs 1,000), PoP will send you a PRAN – Permanent Retirement Account Number. With the help of this number and password, you can run your account. For this process, a one-time registration fee of Rs 125 will have to be paid.
Online process: If you connect your account with your PAN, Aadhaar / or mobile number, then opening an account online is easy. You can validate the registration using the OTP sent to your mobile. After this, you will get a PRAN (Permanent Retirement Account Number) with the help of which you can log in to NPS.