NPS Prosperity Planner: If your monthly living expense is Rs 1 lakh per month now, you will need over Rs 5.7 lakh/month pension on retirement, assuming you are currently aged 30 and the annual inflation rate is 6%. To reach this number with the help of the National Pension System (NPS) account, you will need to contribute Rs 3.12 lakh/year or around Rs 26,000/month, calculation with the recently launched NPS Prosperity Planner (NPP) shows.
The planner shows that by contributing Rs 10,000/month to the NPS account for 30 years, you will able to get a monthly pension of Rs 2.24 lakh provided you buy the annuity with the entire accumulated corpus of Rs 4.19 crore.
In case you buy an annuity only with 60% amount of the NPS corpus, your monthly pension would be Rs 1.34 lakh in case of a Return of Purchase annuity plan and Rs 1.59 lakh in case you buy without ROP plan.
However, if your current monthly expenses are Rs 50,000/month, you will need Rs 2.87 lakh monthly pension on retirement in 2052, assuming 6% inflation. To meet this number, you will have to contribute Rs 1.54 lakh/year or around Rs 12837/month if you buy an ROP annuity with 100% of the corpus. In case you buy an annuity with 60% of the corpus, you will need to contribute Rs 2.58 lakh/year to NPS.
If your current monthly expenses are Rs 1 lakh/month, you will need Rs 5.7 lakh monthly pension on retirement in 2052, assuming 6% rate of inflation. To meet this number, you will have to contribute Rs 3.1 lakh/year or around Rs 25027/month if you buy an ROP annuity with 100% of the corpus. In case you buy an annuity with 60% of the corpus, you will need to contribute Rs 5.2 lakh/year to the NPS account.
What is NPS Prosperity Planner?
As part of Azadi Ka Amrit Mahotsav, PFRDA has provided NPS Prosperity Planner (NPP) for the benefit of subscribers. The planner has been made available by various Central Record Keeping Agencies (CRAs) recognised by the regulator.
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With the help of NPP, NPS subscribers can estimate the projected Retirement Income (Annuity) as per the Annuity options based on their existing contribution under NPS.
“NPP provides the tool for higher Retirement Income through Accelerated Contribution plan in the residual period until retirement duly considering inflation and the projected cost of living expenses,” PFRDA said in a circular dated 9th December 2022.
“NPS Prosperity Planner is futuristic and offers personalized retirement planning for the subscribers based on their past contribution, expected income rise in the future and their cost of living. The calculator thus can provide the subscriber with the reasonable projections which aid in better retirement planning to ensure adequate and sustainable old age income,” it added.
Also Read: How to make the most from NPS investment
While NPS offers unique tax benefits for its subscribers during accumulation and withdrawal, its primary objective is Retirement Planning.
PFRDA says that the working-age population can build a retirement corpus through NPS by the regular contributions carved out from income and periodical enhancement of their contribution commensurate with the rise in income to provide them and their spouse with a regular stream of income once they reach the age of superannuation or retirement.