The National Pension Scheme (NPS) is a popular choice for securing a regular income after retirement. While starting early is ideal, you can still aim for a monthly pension of Rs 2 lakh even with a shorter investment horizon. Here’s how to plan your NPS contributions for this goal.
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NPS withdrawal rules
Currently, NPS subscribers can’t withdraw the entire corpus at maturity. A minimum of 40 percent must be used to purchase an annuity plan, providing regular income. The remaining 60 percent can be withdrawn. However, subscribers can opt for a 100 percent annuity.
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Investment for Rs 2 lakh monthly pension
If you’re 40 years old and plan to invest in NPS for 20 years to receive a monthly pension of Rs 2 lakh, here’s ll you need to do.
• To receive a pension of Rs 2 lakh, you’ll need a total maturity corpus of Rs 4.02 crore, assuming a 6 percent return over 20 years.
• You’ll be required to buy a 40 percent annuity, equivalent to Rs 1.61 crore.
• You can withdraw the remaining Rs 2.41 crore (60 percent).
Achieving a corpus of over Rs 4 crore in 20 years
To accumulate more than Rs 4 crore in 20 years, you’ll need to invest Rs 52,500 every month in NPS, assuming a 10 percent return. This will enable you to reach a corpus of Rs 4.02 crore by maturity. Start planning your NPS contributions today for a financially secure retirement.
