NPS Retirement Planning: Investing Rs 5,000/month can help your wife get Rs 44,793 monthly pension if you open account in her name; check maturity amount

NPS Retirement Planning: A voluntary retirement savings plan, the National Pension System (NPS) is an easily accessible, affordable, tax-efficient, and flexible plan. Under NPS, the person contributes to his retirement account, and his employer can additionally contribute to the individual's account for his security and social welfare. NPS is designed on a Defined Contribution basis, where subscribers contribute to their pension account. There is no defined benefit at the time of exit, and accumulated wealth is based on contributions and investment income.

Under this government scheme, you can open a National Pension System (NPS) account under your wife's name so that she can get a regular income at her retirement. NPS account will give a lump sum amount to the wife at the age of 60 years. Apart from this, you will get the benefit of a pension every month. This will be the wife's regular income. The biggest benefit of an NPS Account is that you can decide for yourself how much pension you want every month. At the age of 60, the wife will not have any shortage of money or be dependent on anyone.

How much to invest in an NPS account

You can open a New Pension System (National Pension Scheme) account in the name of your wife. As per convenience, you get the option to deposit money every month or annually. NPS account can be opened in the name of the wife with even Rs 1,000. NPS account matures at the age of 60 years. Under the new rules, if you want, you can keep running the NPS account till the wife turns 65 years of age.

How Rs 5,000 monthly will become Rs 1.14 crore fund

If your wife is 30 years old, and you invest Rs 5,000 per month in her account, Rs 1.12 crore will accumulate in her account at the rate of 10 per cent returns. On maturity, she will get Rs 45 lakh and Rs 45,000 per month as a pension every month for life lifetime.

Benefits of NPS

Tax benefits to employees on self-contribution

Employees contributing to NPS are eligible for the following tax benefits on their contribution:

Tax deduction up to 10% of salary (Basic + DA) under section 80 CCD(1) within the overall ceiling of Rs. 1.50 lakh under Sec 80 CCE.
Tax deduction up to ₹50,000 under section 80 CCD(1B) over and above the overall ceiling of Rs. 1.50 lakh under Sec 80 CCE.

Tax benefits to employees on Employer's contribution

Eligible for tax deduction up to 10% of salary (Basic + DA) (14% if such contribution is made by Central Government) contributed by the employer under Section 80 CCD(2) over the limit of Rs. 1.50 lakh provided under section 80 CCE.

Tax benefits on investment in NPS Tier-II account

• No tax benefits are available on contributions made in an NPS Tier-II account.
• No tax rebates/special treatment for the gains arising out of investment in NPS Tier-II. The taxation as per the marginal tax rate will apply to you.