Pension Scheme: National Pension System (NPS) is a government-backed pension scheme. In this, a person can save for retirement and at the same time, when he does not have any work, he will also be able to get pension regularly every month.
Under the NPS scheme, individuals can invest as little as Rs 200 per day to build a retirement corpus. With this, he can get a pension of up to Rs 50,000 per month.
Know how to apply for NPS scheme?
Once a person is registered for an NPS account, he/she can start investing in the scheme by choosing a pension fund and investment option. NPS offers two types of investment options: Tier I option and Tier II option.
Tier I option is a mandatory account that individuals have to open to take admission in the NPS scheme. This is a long term investment account which cannot be withdrawn before the individual reaches the age of 60 years.
Tier II option is a voluntary account that individuals can open in addition to Tier I option. This is a flexible account that allows individuals to withdraw their funds at any time.
Benefits of NPS scheme
Tax benefits, flexibility will also be available in the benefits of NPS scheme. Under the NPS scheme, individuals can claim a tax deduction of up to Rs 50,000 per year under section 80CCD(1B) of the Income Tax Act.
They can also claim an additional tax deduction of up to Rs 50,000 per year under section 80CCD(1C) for the contribution made by their employer to the NPS scheme.
How to get 50 thousand every month?
For example, consider a 25-year-old person who will retire at the age of 60. If he invests Rs 200 per day in the NPS scheme, he can accumulate a retirement corpus of around Rs 50 lakh by the time he reaches the age of 60. Assuming an average annual return of 10 per cent, a person can get a pension of around Rs 50,000 per month after retirement.
