National Pension System (NPS) calculator news: NPS subscribers can check tentative returns by using the new NPS calculator
National Pension System (NPS) calculator news: While most of the benefits of the National Pension System are widely known, investors often wonder how much monthly pension they can generate by investing in this scheme. The National Pension System (NPS) Trust has now made it easy to calculate the tentative pension and Lump Sum amount an NPS subscriber can expect on retirement.
The NPS Trust has launched a revamped website, which has made understanding the returns and benefits of the NPS much easier for investors. The website has also made it easy to invest to support your post-retirement life.
NPS subscribers or individuals who want to take benefit of this scheme can check tentative returns they can expect by using the NPS calculator available on the revamped website. For the benefit of readers, we used this calculator to see how much pension one can get by investing very small amounts in this scheme from a young age. Let’s have a look.
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Investing Rs 1500 per month from age 25
The NPS rules allow subscribers to invest till age 75. However, if someone invests just Rs 1500 per month (which is equal to saving just Rs 50 per day) from age 25 to age 60, s/he would retire with a total corpus of approx Rs 57,42,416 if the annual rate of return is 10%.
At the time of exit from the scheme, investors have the option to buy an annuity plan with up to 100% of the corpus. If this subscriber buys an annuity plan with 100% of his/her corpus, s/he will be able to get a monthly pension of Rs 28,712, the calculator shows ( see image below)
In case this subscriber purchases an annuity with just 40% of the corpus, the monthly pension may be approx Rs 11,485 while the lump sum amount that can be withdrawn would be approx Rs 34 lakh.
Investing Rs 3000 per month from age 25
The NPS calculator shows that if someone invests just Rs 3000 per month (which is equal to saving just Rs 100 per day) from age 25 till age 60, s/he would retire with a total corpus of approx Rs 1,14,84,831 if the annual rate of return is 10%. At the time of exit from the scheme, if this investor buys an annuity plan with up to 100% of the corpus, s/he will be able to get a monthly pension of Rs 57,412, the calculator shows (see image below).
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In case this subscriber purchases an annuity for just 40% of the corpus, the monthly pension may be approx Rs 22,970 while the lump sum amount that can be withdrawn would be approx Rs 68 lakh.
Is a 10% annual return from NPS possible?
The annualised return expected from the scheme can either be less or more than 10%. As the scheme provides, market-linked returns, there may be variations in the actual pension corpus subscribers can accumulate till the age of retirement. The returns also depend on the choice of investment scheme under NPS and the fund manager.
The average return in the last 10 years from NPS under the Equity category has been over 13%. The average returns in other scheme categories have also been over 9% in 10 years, data on the NPS Trust website shows (See below images).
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If the subscriber mentioned in the examples above gets 13% returns till the age of retirement, s/he may be able to get up to Rs 63,924 per month by investing Rs 1500 per month from age 25 till 60 and Rs 1,27,848 per month by investing Rs 3000 per month in this duration, the calculator shows.
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NPS subscribers can use this calculator to get an estimate of the expected pension and retirement corpus by entering values such as date of birth, monthly contribution, total years of contribution, expected return on investment etc.
