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NPS Calculator

NPS scheme is a great boon for the citizen of India. This Dynamic scheme was launched by the Indian government on January 1, 2004. Managed by the Pension Fund Regulatory and Development Authority (PFRDA), the main objective of this scheme is to provide retirement income to all citizens and planning the future as per their convenience.

Basically, NPS provide financial security and stability during old age when people are deprived of regular source of income. It is designed systematically and is very easy to understand. NPS is open for people aged between 18 to 60 years on a voluntary basis. All Indian citizens, including both state and central government employees, are eligible for this Scheme. The scheme ensures that people live their life with pride and may not compromise their standard of living even post retirement.

Under this scheme, a person will be allotted with a unique Permanent Retirement Account Number (PRAN). This unique number will remain the same for the rest of the subscriber’s life. The best part is that a subscriber can manage his account by this PRAN number from any location in India.

This scheme is very transparent, flexible, simple, portable, versatile and pocket-friendly.

Types of Schemes under NPS

There are two types of scheme that NPS offers

A) Tier – I Account

B) Tier – II Account

TIER – I ACCOUNT

This is a basic NPS account and is obligatory. It is a non - withdrawal retirement saving account. Under this scheme, the account holder doesn't get the benefit of premature withdrawals, unless the member has completed 15 years. In the rare case of emergency, these withdrawal advances are repayable. Although in this scheme, member has the benefit of partial withdrawals on 25 years. In Tier –I cities, government employees are eligible to invest in government and corporate bonds, while other citizens are subjected to invest in fixed deposits and liquid funds.

TIER – II ACCOUNT

This is a saving account and is not mandatory. There are no tax benefits available under this account. NRIs are not eligible to open Tier – II accounts. A subscriber can activate both Tier – I and Tier II account, but when Tier – I account is closed, you cannot access your tier –II account.

There are some advantages for the account holder in Tier – II such as:

a) The subscriber can withdraw savings from this account at any term duration.

b) Investment can be transferred from Tier - I account to Tier – II account.

c) Tier – II account does not have a locking period and are not even exempted from tax.

d) Yearly account maintenances charges are not payable.

e) No minimum account balance required.

f) Flexible withdrawal facility without any extra charges.

How NPS calculator works

NPS Calculator is a Future Income Calculator. With this calculator, you will be able to calculate how much amount of money you will get after retirement. The amount totally depends on the amount you have invested. To know how much amount you will acquire after retirement, you need to mention the following details:

1) Current age and age you are planning to retire.

2) The amount that will be invested by you every month.

3) Returns expected.

4) The number of years you are willing to get a pension for, after retirement period.

5) The percentage of the amount you will get in either case if you withdraw the amount before 60 years of age or after the completion of the scheme.

6) Expected rate of interest on the investment you will earn during the post-retirement period.

Example

If a subscriber aged 35 plans to go for NPS, the scheme will reach maturity when the subscriber will be of 60 years, and hence, he is left with only 25 years of contributing time. So, if the contribution made is of Rs. 2000 per month and the expected interest or rate of return is chosen as an average of 8%, then the calculator will show invested principal of Rs. 6,00,000 and the interest earned on this will be up to Rs. 12,98,372. The total pension wealth now is Rs. 18, 98,372 with a total tax saving of Rs 1, 80,000. If the subscriber makes a withdrawal of 20% and invests the remaining 80% into the annuity plan with the expected interest rate of 8%, the subscriber will earn a monthly pension of Rs. 10,124 and the lump sum withdrawn will be Rs. 3,79, 674 only.

How to choose the correct NPS Investment Option

NPS subscriber is first required to choose the Pension Fund Manager as well as preferable scheme while registering in CRA system under NPS. Several options are provided to the subscriber.

  • Investment Option: The Subscriber has to decide the investment choice- Active Choice or Auto Choice.

1. Active Choice: Individual Funds

In this investment choice, Subscriber has the full right to take decision about his investments. The Subscriber has to provide the PFM, Asset Class as well as percentage of allocation that is to be done under each scheme of the PFM.

There are four Asset Classes to choose from- Asset class E which is related to Equity and related instruments.

Asset class C related to Corporate debt and related instruments.

Asset class G related to Government Bonds and related instruments.

Asset Class A related to Alternative Investment Funds.

2. Auto choice:

This is an easy option for Subscribers who are not a pro in managing investments. The investments in this option will be made in a life-cycle fund.

FAQs on NPS Calculator

Can I exit from NPS?

Yes, but only in three conditions, i.e. death of subscriber, exiting scheme prematurely and retirement income stream.

Can I have two NPS account?

No, you cannot have two NPS account.

Can I withdraw my pension contributions in PF account?

Yes, you can withdraw contributed Pension amount in PF account. But the service should be at least 10 years and not more than that.

How can I improve my net promoter score?

To improve net promoter score, you need to take care of each and every prospect. They are-

1) Transparency

3) Analyse views and feedback of customer

4) Fast service

5) Keep monitoring your score

Can I withdraw Tier 1 NPS?

Tier- I account is non-withdrawal till the person completes service of 15 years, or he completes the service of 25 years. Only then he can withdraw 50% of his contribution.

Can we withdraw NPS amount?

Yes, but the maximum amount which is allowed to withdraw is 25% of the contribution made.

How can I improve my NPS?

To improve NPS, listen equally to your promoters, your detractors and passives.

How can I open NPS account?

There are two ways to open your NPS account:

  • By using your Aadhaar card
  • By using your Pan card

How can we withdraw money from NPS?

After completing 15 years, withdrawals are allowed. It can be made in the form of repayable advances.

How do I calculate my NPS?

a) For calculation of NPS, use the current age and age you want to get retired.

b) Type of scheme

c) The sum of the amount you want to invest

d) Expected return

e) Number of years you want to receive a monthly pension for, after retirement

How do you calculate NPS?

After inserting the entire details needed, NPS calculator will show you the estimated amount that will be saved by you till you retire.

How do you measure customer satisfaction?

You can measure customer satisfaction by

  • Net protector score
  • Star rating
  • Customer satisfaction
  • Average score

How does NPS scheme work?

The subscriber has to make a regular contribution to the NPS account till retirement, and then receive the particular amount as a pension per month after retirement.

How much NPS can be deducted?

Deduction from salary for retirement saving Rs. 1.5 lakh

Contribution by an individual in NPS Rs. 50,000

Voluntary deduction from the salary of employee 10% of basic salary

Is employer contribution to NPS taxable?

Yes, tax is deducted from it.

Is NPS included in 80C?

NPS receive tax exemption under Section 80C.

Is NPS taxable?

Tier – I is taxable and Tier – II is exempted from tax. Only withdrawals are taxable.

Is NPS Tier 2 taxable?

No, Tier 2 is not taxable only withdrawals are taxable.

What is 80ccd 2?

Employer’s contribution will be eligible for deduction under 80ccd 2 (subject to 10% of your salary)

What is annuity period in NPS?

Annuity period in NPS depends on which annuity scheme is opted by the subscriber.

What is meant by NPS?

NPS means national pension scheme.

What is national pension scheme of Government of India?

National Pension System (NPS) is a contributory pension system in which contribution from subscribers, along with matching contributions from respective governments employers, are collected in an individual pension account of the employee.

What is NPS in salary?

When employer contribution is added to an individual’s salary, then 10% tax is deducted under Section 80CCD(2) of Income Tax Act. This tax is not included in overall limit of Rs. 1.5 lakh under Section 80CCE.

What is the minimum contribution to NPS?

Minimum contribution or Tier – I is Rs. 500 and for Tier – II is Rs. 1000 per month.

What is the tax benefit of NPS?

It offers tax benefits of up to Rs.1.5 lakhs as per the Income Tax Act, 1961.

What is Tier 1 account in NPS?

This is a basic NPS account and is a non - withdrawal retirement saving account.

What is Tier 2 account in NPS?

This is a saving account and is not mandatory. There are no tax benefits available under this account.

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