NPS Calculator: How To Get ₹2.94 Lakh Monthly Pension By Saving ₹12500/Month

according to tax and Investment Experts say that if the NPS account holder uses his entire income tax exemption limit 1.5 lakh per annum through monthly 12,500 NPS contribution from the age of 25 years, then he will be able to get 2.94 Lakh monthly pension after entry into the elite club of senior citizens.

nps interest rate in long term

Talking about the interest rate of NPS in the long term, Karthik Jhaveri, Director-Wealth, Transcend Capital, said, “NPS account holders can invest up to 75% in equity, but I suggest investors to invest 60% in equity and 40% in equity. percentage debt risk. In the long term, one can expect at least 12 percent return from equity risk and 8 percent return from debt risk. This means, the NPS interest rate which is 60:40 equity debt ratio in the long term Can expect to be over 10 percent.”

On how the NPS interest rate would come around 10 per cent in the long term, Kartik Jhaveri said, “60 per cent equity exposure will give 7.2 per cent (12 x 0.6) while 40 per cent debt exposure will give 3.2 per cent (98 x 0.4) long term Leading to an NPS interest rate of around 10.40 per cent.

nps calculator

So if an investor invests 12,500 per month, he would be able to make ends meet 1.50 lakh income tax exemption limit per year by the Income Tax Department while filing Income Tax Return (ITR). Assuming an equity debt risk ratio of 60:40, if an investor opens an NPS account at the age of 25 and continues to invest for the next 35 years, the NPS calculator suggests that the NPS account holder will get an amount equal to the maturity amount Will get 2.87 crores and around 95,707 monthly pension from annuity.

pension calculator

On how to use the maturity amount to increase your monthly pension, Pankaj Mathpal, MD & CEO, Optima Money Managers, said, “An annuitant can expect a return of around 6 per cent on his investment. But, at the same time, if the NPS The account holder uses his maturity amount withdrawn for SWP (Systematic Withdrawal Plan) after the age of 60 years, the monthly pension will increase manifold as SWP will give around 7 per cent annual return.

pension calculator

Pankaj Mathpal of Optima Money Managers said that if the NPS account holder makes this investment 2.87 cr NPS withdrawal amount in SWP for next 25 years, he will get approx 1,98,926 or 1.99 lakh monthly income from this 2.87 crores invested in SWP. Benefits of buying an annuity in the form of NPS 95,707 monthly pension by adding this 1.99 lakh monthly income from SWP, Net The monthly pension that an investor can generate from NPS will reduce 2.94 Lakh ( 1.99 Lakh + 0.95 lakh).

When asked about the SWP schemes that NPS account holders can look at, Pankaj Mathpal listed the following SWP schemes:

1]ICICI Prudential Balanced Advantage Fund;

2] Aditya Birla SunLife Balanced Advantage Fund; And

3]Canara Robeco Equity Hybrid Fund.

Disclaimer: The views and recommendations above are those of individual analysts or personal finance companies and not Mint’s. We advise investors to do due diligence with certified experts before making any investment decision.