National Pension System (NPS), also referred as New Pension Scheme/National Pension Scheme, is an easily accessible, low cost, tax efficient under (Section 80CCC) & (Section 80CCD), flexible and portable retirement savings account. NPS pension calculator will help you check the NPS returns. NPS calculator gives a complete idea about current value of your NPS investment.
Disclaimer: The above calculation and illustration of figures are indicative only and not on actual basis.
Status of your Pension Account at the time of Retirement
Retire Amount Chart
FAQS - NPS CALCULATOR
+1)Why should you plan for Retirement or importance of Retirement Planning?
Planning for Retirement is of Paramount importance as:
- Regular source of income in the form of Salary dries up.
- Average life expectancy has increased, thus many post retirement years to be accounted for.
- Increasing cost of living and medical expenses.
- After toiling hard for years at work, you deserve to pursue your passions and unfulfilled desires (e.g. travelling abroad for vacation)
+2) How to plan for retirement?
Plan early; Start with small contributions which can grow gradually depending on your capacity to contribute. Keep contribution towards pension/ retirement as a part of the monthly expenses/ investments among others such as Rent/ EMI, Groceries, Investment, Shopping etc to ensure it does not affect your regular expenses; Have set timelines and goals in your mind Choose product which are in line with your expectations and risk appetite.
+3) What is NPS?
Government of India introduced NPS for Central Government Employees joining services w.e.f 1st Jan 2004. On 1st May 2009, on voluntary basis NPS was made available for all citizens of India. PFRDA (Pension Fund Regulatory Development Authority) was created as regulator for the Pension sector. NPS is based on Personal retirement accounts (PRAs) created for individual members. NPS accretes savings into subscribers PRA while he is working and use the accumulations at retirement to procure a pension for the rest of his life.
NPS is a voluntary contribution system where the pension amount is based on the contributions made by the investor. NPS is an investment which provides investors an option to avail decent market based returns over long term. Periodic contributions will get invested through PFRDA appointed Pension Fund Managers (PFMs) chosen by the investor in a combination of asset classes as per the choice of investor.
+4) Why NPS?
Tax Benefit: EET model -> Exempt – Exempt – Tax ( The invested amount is taxable, the pension you receive is taxable)
Individual’s Contribution: Investment in NPS made by an individual is eligible for tax exemption under Section 80CCD (1a) read with Section 80CCE of the Income Tax Act, 1961 which has an overall limit of Rs. 1.50 lakh. Budget proposal on Employee/Individual(s) contribution towards NPS is exempted u/s 80CCD (1b ) up to 50,000/- extra is subject to approval of Finance bill.
Employer’s Contribution: Employer’s contributions to NPS will NOT be included in the Rs1.50 lakh limit exemptions that employee avail of under Section 80C and thereby al
low to SAVE EXTRA TAX on this amount under sec 80CCD(2) of the Income Tax Act, 1961
Market based Returns: NPS offers the investor an option to decide an asset allocation between Equity Instruments, Corporate Bonds and Government Securities, with up to 50% exposure to Equity instruments.
Benefits of Joining NPS
- It is voluntary- NPS is open to every Indian citizen. One can choose the amount you want to set aside and save every year.
- It is simple all one has to do is to open an account with any one of the POPs and get a PRAN.
- It is flexible- One can choose their own investment option and Pension Fund Manager and see your money grow.
- It is portable- One can operate their account from anywhere in the country, even if there is change in city, job or selected pension fund manager.
- It is regulated- NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.
- Low Charges: All charges levied under NPS are defined and regulated by Pension Fund Regulatory and Development Authority (PFRDA) to ensure reasonability of charges
+5) How to open NPS account ?
An account has to be opened with POP/ POP-SP after which one will be allotted a unique Permanent Retirement Account Number (PRAN)
Under NPS following two types of accounts will be available:
Tier-I account: One shall contribute savings for retirement (main pension account) into this (non-withdraw able account). This also offers tax exemption.
Tier-II account*: This is a voluntary savings facility. One will be free to withdraw their savings from this account whenever one wishes to. No tax exemption.
* Subscriber will be eligible for opening Tier – II account only if he has opened Tire – 1 account and it must be active.
+6) How does NPS work?
Investor has to choose the PFM who will manage their funds while filling up the form among the PFMs listed.
Under Investment Choice there are two options:
Active Choice One will have the option to actively decide as to how their NPS pension wealth is to be invested in the following three options: Asset Class E - investments in predominantly equity market instruments.
Asset Class C- investments in fixed income instruments other than Government securities.
Asset Class G - investments in Government securities.
Sum of all must equal 100%. One can choose to invest their pension wealth in C or G asset classes and up to a maximum of 50% in equity (Asset class E).
+7) What is NPS- Minimum Contribution Requirement?
For Tier-I Minimum amount per contribution - Rs 500 Minimum contribution per year - Rs 1,000 Minimum number of contributions - 01 per year For Tier-II Minimum contribution at the time of account opening - Rs.1000/- Minimum amount per contribution - Rs.250/-
+8) NPS- Withdrawing Options
Vesting Criteria Withdrawal Criteria On attaining the retirement age Max 60% of the pension wealth may be withdrawn in lump sum or in a phased manner, between retirement age to next 10 years Min 40% of the pension wealth to be kept invested in life annuity Any time before the defined age of retirement Max 20% of the pension wealth may be withdrawn At least 80% of the pension wealth to be kept invested and annuitized at retirement Death due to any cause Nominee may receive 100% of the NPS pension wealth If nominee wishes to continue, he/she shall have to subscribe to NPS individually
+9) NPS- Annuity Investment?
Annuity investment can be made with any life insurance company registered with IRDA. Depending on the ASP chosen Annuity tenure, rate and amount may vary.
Annuity Service Provider:
- Life Insurance Corporation of India
- SBI Life Insurance Co. Ltd.
- ICICI Prudential Life Insurance Co. Ltd.
- Star Union Dai-ichi Life Insurance Co. Ltd.
- HDFC Standard Life Insurance Co. Ltd
+10) How to Open NPS account online?
With the world converting to digital , now all the financial products are available online for investment to all the investors around the world round the clock.
NPS has also started its services online and Karvy is providing you a platform where you can generate your PRAN online and then invest in NPS online. The services are called E-NPS and this platform can be used by existing PRAN holder and New Investors too.
An individual having net-banking facilities enabled with his/her bankers can open his/her Individual Pension Account under NPS by choosing any one of the following options:
- Option # 1 by providing Aadhaar details
- Option # 2 by providing PAN details and KYC details as recorded with the Bank in which he/she maintains his/her bank account and that Bank is empanelled in eNPS.
Steps to create online NPS account with Karvy (Aadhaar Based)
- Enter your basic profile details.
- Register With: Aadhaar or Permanent Account Number (PAN)
- Account type - ‘Tier I’ or ‘Tier I & Tier II’
- Keep your aadhaar card and mobile number registered with aadhar handy because you will receive an OTP on it.
- Don’t miss to add nominee.
- Upload a scanned copy of picture and signature and move to payment page
- On confirmation on the payment, PRAN will be allotted to the subscriber.
- Once your online account it created the subscriber will receive a PRAN kit to his registered address, The subscriber should take a printout of the auto-populated form, paste his/her photograph (he/she should not sign across the photograph) & affix his/her signature.