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Benefits of NPS Calculator

IndianMoney.com Research Team | Posted On Wednesday, June 12,2019, 04:50 PM

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Benefits of NPS Calculator

 

 

About NPS Calculator

The NPS calculator is a comprehensive tool through which you can understand the benefits of the national pension scheme. Many online websites and aggregators offer the facility of the NPS calculator. The NPS calculator is an online tool that helps you evaluate return on investment, by depositing a specific sum of money, until you attain the age of 60 years.

The NPS calculator is a simple tool as the user only needs to enter the necessary inputs and click on the calculate button. The output is displayed on the screen containing details like total amount invested, total interest earned and the maturity amount. Using the NPS calculator you get an idea on the contributions required to attain financial goals and can invest the necessary amounts.

Good retirement planning helps you earn inflation-beating returns and generate a good corpus at retirement. Currently, the NPS scheme offers high returns and with a bit of planning the investor is sure to receive a good corpus at retirement.

NPS offers tax deduction on an investment up to Rs 1.5 Lakh a year under Section 80C of the Income Tax Act. There’s an additional Rs 50,000 a year deduction under Section 80CCD(1B). The maximum amount you can withdraw at retirement is 60% of accumulated wealth. The lump sum amount (60% of the corpus) received by the investor on retirement is fully tax free. The remaining 40% is compulsorily annuitized. This way the investor can generate a good corpus by investing in NPS.

Want to know more on NPS? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

Benefits of NPS Calculator

Reasons for the Introduction of NPS:

The NPS is a central government initiative that was introduced in the year 2004, in order to provide a pension based on the contributions made. The main objective of the NPS scheme is to offer income in retirement and inculcate the habit of savings among the citizens. The scheme encompasses both organized and the unorganized sector and it’s a cost-effective method of creating a retirement corpus.

See Also: How Does National Pension Scheme Work?

Who Can Use the NPS Calculator?

Any individual who fulfils the eligibility criteria and is willing to invest in the scheme can use the NPS calculator. According to the rules specified by the Government, any Indian citizen above 18 years of age is eligible to invest in the scheme. Individuals must submit authentic KYC documents to invest in this scheme.

Methods of Using the NPS Calculator:

Outlined below are the details required to use the NPS calculator:

  • Your current age and the retirement age
  • The amount you wish to contribute each month towards your NPS account
  • Returns expected from the total investment
  • Number of years you wish to receive pension post-retirement.

See Also: Why New Pension Scheme is Good?

How Does it Work?

Once you provide the above-mentioned inputs, the NPS calculator will display the total corpus accumulated at the time of your retirement.

The NPS works like any other pension scheme. The subscriber (private employee and public servant) must make monthly contributions from the time of joining of the scheme, till the subscriber attains 60 years of age.

The NPS calculator makes a comparative analysis and estimates the pension amount the subscriber receives, based on the age of the subscriber at the time of joining the NPS and the monthly contributions made by the subscriber. The contributions made are invested in equities, corporate bonds and government securities, which is why it is difficult to estimate the returns at maturity. Returns fluctuate based on the market conditions.

See Also: New Pension Scheme for all Citizens by Government of India

Details Displayed by the NPS Calculator:

The NPS calculator displays investment details. Listed below are the results offered by the NPS calculator on providing the necessary inputs:

  • The total amount at the time of maturity
  • Total interest earned
  • Total amount invested over the period

The NPS calculator shows details like the monthly pension amount and the total amount withdrawn at maturity. The NPS calculator also shows the monthly pension you are likely to receive, for the deposited amount, based on the annuity.

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