National Pension System is a scheme launched by the Government of India that offers stability to all Indian Citizens post-retirement. The post office has been an integral and reliable part of the Indian system for decades and hence it also allows citizens of India to invest in the National Pension Scheme.
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Investment Per Month
Expected Return on Investment
Percentage of Corpus to be allocated for Purchase of Annuity
Expected returns from the Annuity
National Pension Scheme offered by Post Offices in India has been regulated and administered by the Pension Fund Regulatory and Development Authority (PFRDA) and is, therefore, a completely reliable government plan.
Let us know more about the National Pension System focusing on the NPS calculator, benefits, and more offered by the Post Office.
The PFRDA (Pension Fund Regulatory and Development Authority) has authorized all the Head Post Offices in India to act as one of their (POP) Points of Presence. Post Offices offer an offline investment process for the NPS (National Pension Scheme). All you have to do is visit the nearest head post office and fill in the documents for the same.
An easy-to-use and hassle-free tool, Post Office National Pension Scheme Calculator calculates the lump sum amount to be received just by entering a few basic details related to the scheme. Here is the compound interest formula to compute the NPS amount:
FV = P (1 + r/n) ^ nt
FV = Final Value
P = Principal Sum
r = Rate of interest per annum
n = Total number of times the interest compounds
t = Tenure
Suppose Sunil is 34 years old and his monthly NPS contribution to a Head Post Office is Rs. 3,000. Assuming that the Rate of Interest (ROI) is 10% annually, he needs to add the pension amount for the remaining 26 years of his retirement. As per the NPS formula,
The total principal amount invested till the age of retirement will be around Rs.9.36 lakh (approximately)
The total sum to be received at the time of maturity will be around Rs.44.35 lakh (approximately)
Few important details needed at the time of calculation of Post Office NPS are as follows:
National Pension Scheme holder’s current age
Choice of NPS option (Auto or Active choice)
Amount to be invested
Investment type to be made (that is, monthly or yearly)
The following steps need to be implied in case an individual wish to invest in Post Office National Pension Scheme:
Visit https://npscra.nsdl.co.in/pop-sp.php website
Enter your location and the state that you reside in
A page of nearest Head Post Offices listed under the POP (Point of Presence) list by the PFRDA will appear that accepts offline registration of NPS forms
Visit the nearest branch for further process
Visit the nearest POP Post Office branch
Ask for the National Pension Scheme subscribers form
Fill in all the relevant details in the form
The subscriber’s form can also be downloaded online from here
Submit all the necessary documents for KYC like,
Deposit the minimum account for the desired account type
Once the registration process is complete, now you can access the Post Office NPS Account
PRAN (Permanent Retirement Account Number) is generated after the registration process is completed
The following is the eligibility criteria for this government-backed scheme:
An NPS account is operational for citizens residing in India only
18 years is the minimum age criteria for opening National Pension Scheme Account
65 years is the maximum age criteria for opening National Pension Scheme Account
The applicant is not allowed to own more than 1 NPS account
KYC Compliance is compulsory before applying for an NPS account
NPS is a long-term investment scheme that is completely government-backed. National Pension Scheme is considered safe and hence protects the financial future of the employee after retirement without any hidden clauses.
Here are some of the top benefits offered under the National Pension Scheme:
Seamless portability is one of the biggest benefits of the National Pension Scheme when compared to other pension plans in the market. If a person switches from one job to another or moves from one location in India to another, the transfer of the NPS Account will be carried smoothly online without any hassles or burdens. As it is a PFRDA (Pension Fund Regulatory and Development Authority) regulated scheme, transparency is guaranteed.
National Pension Scheme is great for liquidity as the contributions made by the employees work systematically. An investor needs to have one of the following mentioned accounts to carry on NPS transactions. Also, with the following account, a unique Permanent Retirement Account Number (PRAN) is compulsory while attaining the liquidity benefits.
Tier-I account works especially as a pension account
The minimum contribution to open a Tier-I account is Rs.500
Withdrawals are subject to specific conditions and restrictions
Tier-II account can be operational only if Tier-I account is active
Liquidity is offered via investments and withdrawals
The minimum contribution to open a Tier-II account is Rs.250
It is a voluntary account
Income Tax Act 1961
U/S 80CCD (1)
For Tier-I investment, 1.5 lakh of tax is deductible within the total ceiling
U/S 80CCD 1(B)
For Tier-I investment, up to Rs.50,000 is allowed as deductions
U/S 80CCD (2)
For Tier-I investment, deductions up to 14% for central government and 10% for the rest are eligible
“Tax benefit is subject to changes in tax laws. Standard T&C apply.”
National Pension Scheme works as per the general requirement of the employees in India and hence is considered to be very flexible. The following choices of investment are offered under the National Pension Scheme account:
It is a default option if the employee is confused between choices
The age of the investor is taken into consideration while allocating the assets
The investor has the right to select the proportion of investment under auto choice
Under the active choice, assets are generally allocated between,
Allocation to be made as per the investors will
A maximum of 75% of asset allotment can be made under Equity
Switching between funds and investment options is on the investors will
National Pension Scheme is the scheme for the nation by the nation. It aims to create a financial corpus for Indian citizens after their retirement so that they can lead a happy and financially settled life.
Post Office NPS Calculator helps in understanding the current financial standing of the investor and planning their further investments keeping in mind their future financial needs. It is important to keep all the future aspects in mind before making any kind of investment.
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