The National Pension Scheme (NPS) is a government-backed retirement savings initiative designed to assist individuals in securing a financially stable future after retirement. Whether you are in public service or part of a private company, having a reliable source of income during retirement is paramount. The NPS not only allows for systematic savings but also offers a potential monthly pension of ₹1 lakh by investing strategically. In this article, we’ll explore the NPS, its benefits, and how you can achieve substantial retirement income by investing ₹20,000 monthly.
What is the National Pension Scheme?
Launched in 2004, the National Pension Scheme was initially designed for government employees. However, in 2009, the government expanded the eligibility to include private sector employees as well. This scheme is accessible nationwide, providing a secure and structured approach to retirement savings. One of the key features of NPS is that after retirement, you can withdraw 60% of your accumulated corpus as a lump sum, while the remaining 40% must be utilized to purchase an annuity plan, ensuring a regular monthly pension.
How to Achieve a Monthly Pension of ₹1 Lakh
To qualify for a generous pension under the NPS, you must start investing at least ₹20,000 per month by the age of 40. It’s advisable to consider increasing your investment by 10% annually. To illustrate how consistent investment can lead to a substantial pension, we can break down the numbers below:
| Age Range | Monthly Investment (₹) | Total Investment (over the years) | Expected Monthly Pension (₹) |
|---|---|---|---|
| 40 – 44 | 20,000 | 12,00,000 | 40,000 |
| 45 – 49 | 22,000 | 13,20,000 | 60,000 |
| 50 – 54 | 24,200 | 14,70,000 | 80,000 |
| 55 – 60 | 26,620 | 19,00,000 | 1,00,000 |
As shown in the table above, by starting a disciplined investment routine at the age of 40, your retirement income can significantly increase, allowing for a monthly pension of ₹1 lakh.
Key Benefits of the NPS
- Tax Benefits: Contributions to NPS can be claimed for tax deductions under section 80C of the Income Tax Act, up to ₹1.5 lakh.
- Flexible Investment Options: Subscribers can choose between various asset classes, including equities, government securities, and corporate bonds, allowing for tailored risk management.
- Portability: The NPS is portable across jobs and locations, enabling subscribers to keep their retirement savings intact without disruption.
- Doors to Additional Savings: You can also make additional contributions, beyond the mandatory requirements, to further improve your retirement corpus.
Disclaimer: This article is intended purely for informational purposes. Before investing in any scheme or stock, seeking advice from a financial expert is strongly recommended. TV 9 Bharatvarsh does not provide investment advice in any fund or stock.