Retirement Planning: How to get Rs 1 lakh pension every month?

A voluntary and long-term investment scheme for retirement benefits, the National Pension System is managed by the Pension Fund Regulatory and Development Authority
(PFRDA). The scheme is open for employees from both the public and private sectors. It encourages individuals, aged between 18 and 70 years, to invest in a pension account at regular intervals to build a retirement corpus. After maturity the investors can withdraw a portion of the investment as a lump sum and the balance can be used to receive monthly pension.

Therefore, it is a good scheme for anyone who wants to plan for retirement. Investing in NPS from a young age also helps to ensure maximum monthly pensions after the age of 60. If you are also planning to open an NPS account, know about its benefits and how to earn a pension of up to Rs 2 lakh per month after retirement.

Benefits of the National Pension Scheme

Returns: In comparison to other retirement benefit schemes, NPS is known for offering better and higher returns. It has so far delivered around 9 to 12 per cent of annualised returns to investors.

Flexibility: Investors get a lot of flexibility with NPS subscriptions. With this, they can start investing at any time of the year and also change their investment amount. Besides that, they can also choose their investment option and operate their accounts from anywhere.

Tax benefits: Employees contributing to NPS can claim a tax deduction of up to 2 lakh per annum under Sections 80CCD(1), 80CCD (2) and 80CCD(1B).

How to earn Rs 1 lakh pension per month with NPS investment?

Let’s understand how to earn Rs 1 lakh pension through NPS investment with an example. If an investor starts to contribute to the NPS scheme at the age of 40, then the investment tenure will be 20 years (till the retirement age of 60 years).  

In order to receive a monthly pension of Rs 1 lakh you need to invest Rs 66,000 every month for 20 years. Your total investment will be 1.58 crore and assuming a 10 per cent return, the gains will amount to Rs 3.46 crore. Your total corpus fund after 20 years will be Rs 5.05 crore.

After maturity if you withdraw 60 per cent of the corpus as lump sum, the amount will be Rs 3.03 crore. The balance 40 per cent, Rs 2.02 crore will be left for annuity option. Considering a 6 per cent annuity rate you will receive a monthly pension of Rs 1.01 lakh every month.

It’s important to note that to reduce the amount of monthly investments, you can start your NPS account from an earlier age.