The National Pension System (NPS) has become most preferred investment scheme in the country. As of financial year 2023-23, there were more than six crore NPS subscribers,  according to PFRDA data. Since its launch, the trust of people has only grown in the pension scheme. Along with high return, the subscriber also gets cushion of safety of capital from the viewpoint that it comes under the jurisdiction of the PFRDA. People have made considerable amount of return on investment. Lets see suppose you want Rs 1 lakh pension per month by investing in this retirement scheme, then, how much you need to invest? Well, with just Rs 500 per day investment, you can get more than Rs 1 lakh pension per month in NPS for your entire life. Moreover, you will be left with Rs 2.29 crore additional corpus at retirement. Surprised? Lets see how this would be possible! First we will have to make some assumptions, which, are as follows:

Assumptions:

Investment Start Age –  25 years

Retirement Age – 60

Percentage of Annuity in Entire Corpus – 40%

Expected Annuity Rate – 6%

Expected Return On Investment – 10%

Metrics:

Considering these assumptions, if you begin NPS investment with just Rs 500 per day at the age of 25, and, you keep investing tirelessly for 35 long years, then at retirement, you would be able to accumulate NPS corpus of Rs 5.74 crore and get Rs 1 lakh pension per month. Out of this corpus, you can purchase minimum annuity with Rs 3.44 crore (40% of Rs 5.74 crore). With 6% assumed annuity return, you can get Rs 1 lakh pension per month  and you also will be left with Rs 2.29 crore lump sum amount that you would be free to invest anywhere. Another remarkable thing is that, during the course of investment period, your total contribution in the NPS account would be just Rs 63 lakh.  

 Note: NPS is not a guaranteed scheme. The returns are market linked. The above example is just for illustrative purpose. The actual figure could vary. We haven’t taken into account salary appraisal factor.