How Much Pension Will You Get from Your NPS When You Retire?

How Much Pension Will You Get from Your NPS When You Retire?

The National Pension System (NPS) is a simple way to save money for your retirement and receive a steady monthly income when you stop working. If you’ve been wondering, “How much pension will I get when I retire?”, this guide will explain how it works in easy terms and answer common questions like what happens to your money after your death.

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What Happens to Your Money in NPS?

When you invest in NPS, your money grows over time because it is invested in stocks and bonds. This money, called your corpus, is what you’ll use to get your pension.

When you retire at 60, here’s how the money is used:

1. 60% of the total amount can be taken as a tax-free lump sum.
2. At least 40% must be used to buy an annuity, which gives you a monthly pension for life.

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How to Calculate Your Pension

Here’s a simple example:

Imagine This:

• You are 30 years old.
• You save ₹5,000 every month in NPS.
• Your money grows at 10% every year.
• You retire at 60 years old.

Step-by-Step:

1. Total Savings at Retirement: ₹1.14 crore.
2. 40% for Annuity: ₹45.6 lakh (used to generate your pension).
3. Monthly Pension: If the annuity rate is 6%, you’ll get around ₹22,833 per month.
4. Lump Sum Withdrawal: ₹68.4 lakh (the remaining 60%, tax-free).

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Find the below NPS pension calculator to calculate your pension:

FAQ: What Happens to Your NPS Money After Your Death?

1. If You Die Before Retirement

• Your entire corpus will be paid to your nominee.
• Your nominee can withdraw the money as a lump sum or use it to buy an annuity for their pension.

2. If You Die After Starting Your Pension

The fate of your pension depends on the annuity plan you choose:

• Single Life Annuity: The pension stops after your death, and no money is returned to your nominee.
• Joint Life Annuity: Your spouse will continue to receive the pension after your death.
• Annuity with Return of Purchase Price: Your nominee gets back the amount used to purchase the annuity after your death.

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Other FAQs

Can I Change My Nominee?

Yes, you can update your nominee details anytime through your NPS account.

What Happens If I Stop Investing in NPS?

If you stop contributing, your account becomes inactive. You can reactivate it by paying a small penalty and pending contributions.

Can I Withdraw All My Money Instead of Buying an Annuity?

No, you must use at least 40% of your corpus to buy an annuity. The rest can be withdrawn as a lump sum.

Can I Start NPS If I’m Over 40?

Yes, you can start NPS anytime between the ages of 18 and 70. However, the earlier you start, the more your money grows.

Is NPS a Good Option for Retirement?

Yes, NPS is an excellent choice for disciplined retirement savings, especially if you start early and invest regularly.

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