The Pension Funds Regulatory & Development Authority (PFRDA) governs the national pension saving scheme. A voluntary investment helps an individual get an extended income monthly after retirement. Once the income tenure gets completed, an individual can get a lump sum amount out of the NPS giving an ultimate value of income after retirement.
Benefits of NPS
The benefits of NPS are as follows:-
1. Minimum Investment
There are mainly two types of investment in NPS- Tier I & Tier II. You can invest a minimum. ₹500 in Tier I and ₹1000 for Tier II (only for central government employees) from the age of 18 to 65. Tier I and Tier in EPS, where 10% of salary deduction occurs whereas the NPS can give you up to 12% returns with these investments.
2. Liquidity
In Tier II (TTS & regular), you have the flexibility to withdraw money before the lock-in period. In case of Tier I, you have to buy annuity (80 percentage) to avail the withdrawal. Also, it is related to tax, unless you start the scheme by retiring at 60 years of age. Besides, you can withdraw 25% of the corpus for any critical condition mentioned in the list of extraordinary situations.
3. Annuity
By NOS, you can safeguard your money and get the benefits for a long time. In case, you invest 50,000/- per month through SIP investment at a 10% CAGR for 30 years, your corpus becomes 30 crore. You can buy an annuity, suppose 60% of your corpus which you can use as your retirement, that is 18 crore at 6 lakhs per month (at 4% sustainable rate).
4. Taxability
You can get extreme tax benefits from NPS funds. Over any limits of 1.50 lakhs, you get up to 50k tax deductions under section 80CCE. You can also get upto 20 percent tax benefits on gross income u/s 80CCD(1).
5. Prematurity & Nominees
One can get exit under both types of schemes Tier I & Tier II. Under Tier I scheme, one willing to exit before 60 years can do so but for that she has to buy 80% of the corpus in annuity. On the other hand, Tier II TTS & regular scheme, one can get their exit voluntarily at any time. After the death of the scheme holder, the corpus is automatically transferred to the nominees or the heirs.
How to Calculate NPS?
A National Pension Scheme Calculator is an instrument that helps the investor to calculate the wealth according to the maturity amount and the total gains of the person after the retirement as a monthly pension.
Can also help in calculating the interest rates, total wealth, returns, deductions and changes of an amount due to inflation.
It also gives you flexibility to measure your tags and your death or equities to estimate your Corpus after your retirement.
Conclusion
The NPS scheme provides greater convenience in terms of maximum capital gains for retired people. Also it comes with various tags detection options liquidity and exit options that helps the investors withdraw the money whenever they fit comfortably. Hence, starting an NPS earlier you can get a huge corpus to happily enjoy your retired life.
