Know Your NPS Annuity: What should be your investment amount to get Rs 1 lakh monthly pension; know here

NPS Annuity Calculator: National Pension System (NPS) has two stages- wealth accumulation and withdrawal. In the market-linked retirement-focused scheme, an NPS subscriber can invest from the age of 18 years to 75. At 60 years of age, they get the option to withdraw an amount from their retirement corpus and purchase an annuity plan. However, they can withdraw only up to 60 per cent of their corpus.

From the rest of the 40 per cent amount, they need to purchase an annuity plan.

The return from annuity investment helps them get a monthly pension.

If a senior citizen has met their retirement goals and they don't need a lump sum amount at 60, they can purchase annuity from the 100 per cent amount of their retirement corpus.

The return from annuity can vary, and can be anywhere between 5.25 per cent and 9.25 per cent. 

NPS has 5 types of pensions. In each pension, the monthly income is different for an NPS subscriber.

Know which are the 5 NPS pension categories and what should be the minimum annuity amount to get at least a Rs 1 lakh monthly pension in all of them.

Types of NPS pensions

The 5 types of pensions provided to NPS subscribers are-  annuity for life with return on purchase (ROP), annuity for life without ROP, joint life annuity with ROP, joint life annuity without ROP, and family income with ROP.

How to calculate annuity amount 

For annuity calculation, we will take the example of a private sector employee whose age is 60 and his spouse's age as 58.

We are taking all NPS annuity subscribers for the calculations (source NSDL's official website).  

Minimum amount to get Rs 1 lakh monthly NPS pension in all categories

The minimum amount to get a Rs 1 lakh monthly pension at present is Rs 1,71,00,000 (Rs 1.71 crore).

See, what is the minimum and maximum monthly pension in different categories that this amount can help one get.

Monthly pension in annuity for life with ROP

In this NPS pension category, annuity stops on the annuitant's death, and the purchase price (ROP) is returned to the nominee of the annuitant. 

A Rs 1,71,000,00 annuity purchase will help one get a maximum monthly pension of Rs 1,00,671.12, and a minimum monthly pension of Rs 88,325.61.

Monthly pension in annuity for life without ROP pension

Here, annuity ceases on the annuitant's death, and the purchase amount is not returned to the nominee.

A Rs 1,71,000,00 annuity purchase in this category will help one get a maximum pension of Rs 1,32,408.00 and a minimum pension of Rs 1,07,909.

Monthly pension in joint life annuity with ROP

In this category, the annuity amount is paid to the spouse during their lifetime, and ROP is returned to the nominee after the spouse's death.

On a Rs 1,71,000,00 annuity purchase, the maximum NPS monthly pension in this category is Rs 1,00,499.00, and the minimum is Rs 88,190.30.

Monthly pension in joint life annuity without ROP

In this NPS pension category, on the annuitant's death, annuity is paid to the spouse during their lifetime. If the spouse predeceases the annuitant, the annuity will stop after the annuitant's death.

On a Rs 1.71 crore annuity purchase, the maximum NPS monthly pension available under this category is Rs 1,16,983.00, while the minimum is Rs 94,158.

Monthly pension in family income with ROP

In this NPS pension category, on the death of the annuitant, their spouse gets a monthly pension for lifetime. After the spouse's death, the annuity goes to the living dependent mother and father of the deceased annuitant. 

After all these family members are covered, annuity ceases, and the full payment is returned to the surviving children or legal heirs of the annuitant.

A Rs 1,71,000,00 annuity purchase in this category will provide a maximum monthly NPS pension of Rs 1,00,499.00 and a minimum pension of Rs 87,165.

Monthly NPS pension on Rs 1.71 cr annuity purchase