NPS: How Rs 5,000 monthly contribution can help your spouse get Rs 1.14 crore corpus and Rs 45,000 pension
NPS account can be opened in the name of spouse 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.
The National Pension System (NPS) is a market-linked pension scheme. People can utilise this scheme to save money for retirement. Employees in both the private and governmental sectors, as well as self-employed people, are eligible for NPS. The Pension Fund Regulatory and Development Authority (PFRDA) oversees this scheme.
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What is NPS?
It is a market-linked scheme and the returns depend on the performance of equity the fund scheme has invested its money in.
Benefits of NPS
When you retire, you will get a lump payment as well as a pension through the NPS.
Open an account under your spouse's name
You can open a NPS account in the name of your spouse. As per convenience, you get the option to deposit money every month or annually. NPS account can be opened in the name of spouse 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 contribution can help them get Rs 1.14 crore
Suppose your wife is 30 years old and you invest Rs 5,000 every month in her NPS account. If she gets a 10 per cent annual return on investment, then at the age of 60 she will have a total of Rs 1.12 crore in her account. She will get approximately Rs 45 lakh from this scheme Apart from this, your spouse will start getting a pension of around Rs 45,000 every month. They will continue to receive this pension for life.
One-time maturity amount and monthly pension
Age – 30 years
Total investment period – 30 years
Monthly contribution – Rs 5,000
Estimated return on investment – 10 per cent
Total pension fund – Rs 1,11,98,471 can be withdrawn on maturity.
Amount to buy an annuity plan Rs 44,79,388.
Rs 67,19,083 estimated annuity rate 8 per cent Monthly pension – Rs 44,793.
Tax benefits
Tax exemption benefits are also available in the NPS such as tax exemption up to Rs 2 lakh and tax exemption on withdrawal of 60 per cent of the amount. NPS is such a scheme, in which tax exemption is available on additional investment of Rs 50,000 after the limit of Rs 1.5 lakh is reached. You can save up to Rs 2 lakh tax every year in NPS.
How the NPS pension is calculated?
Anyone from the age of 18 to 70 years can take benefit of NPS. Whatever contribution you make to NPS, that money is divided into two parts. After retirement, you can take 60 per cent of the total corpus in a lump sum and 40 per cent goes into an annuity, which prepares your pension.
Disclaimer: Investments in NPS are subject to market risks. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.