If you want to save during your earning life and want a fixed pension during the retired years, the National Pension System (NPS) can be the investment plan to consider. By using the NPS Pension Calculator, you can calculate how much you need to start saving from now on to get a pension after retirement of Rs 50,000 or Rs 1 lakh or even a higher amount for lifetime.
You just have to open a NPS account and start saving regularly till your retirement age which typically is when you hit 60. On maturity ( when you are 60), you can withdraw a maximum of 60 per cent of corpus and on the balance 40 per cent, pension is to be paid. The balance 40 per cent is to be handed over to a life insurance company from where you will start getting pension or annuity for lifetime.
But before you open an NPS account, make sure you plan properly to save towards the desired amount of monthly pension. You can use the NPS calculator ( on NPS Trust website) to calculate the amount you need to save each month to get the desired amount of pension after retirement.
NPS Pension Calculator gives you a rough idea on the tentative pension and the lump sum amount that you can expect on maturity. The most important part of the NPS
Pension Calculator is the withdrawal rate that you will opt for at age 60. If you choose not to withdraw the corpus and take a pension on the entire corpus, you can aim for a higher pension even by saving a smaller amount.
While using the NPS calculator to calculate monthly pension, you will require a few things as below:
Your current age
Your retirement age ( It may be automatically shown as NPS matures at age 60)
You monthly contribution
You assumed growth rate – Keep assumed return between 5 and 15 per cent
Your withdrawal percentage on maturity – Try with 40 per cent and zero percentage to see varying results.
Assumed annuity rate – Keep assumed return of 6 per cent
Here is an illustration for someone age 30 ( NPS maturity age 60), assumed growth rate of 10 per cent, assumed annuity rate of 6 per cent
At zero per cent withdrawal at age 60:
One needs to invest Rs 9000 each month to get a monthly pension of Rs 1 lakh.
At 40 per cent withdrawal at age 60:
One needs to invest Rs 22000 each month to get a monthly pension of Rs 1 lakh.
So, depending on your age, amount of savings, rate of return and the withdrawal rate, you can plan for getting Rs 50,000 or Rs 1 lakh or even a higher amount of lifetime pension. There’s more to getting from NPS other than just the tax benefits which anyhow comes along by investing in NPS.