Everything You Want To Know About Post Office NPS Calculator
Updated On Jan 04, 2022
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NPS calculator allows an individual to compute the provisional lump sum and pension amount a subscriber, under NPS, can expect at retirement based on the contributions made monthly; the annuity purchased, the expected rate of returns on investments, and the annuity. The NPS calculator only illustrates the tentative pension and does not guarantee the exact figure.
Who Can Use The NPS Calculator?
Individuals who are eligible to invest in NPS schemes can use the NPS calculator. According to the NPS rules, Indian citizens between the ages of 18 years and 60 years are eligible to invest in the scheme. However, individuals must submit the relevant Know Your Customer (KYC) documents in order to invest in the scheme.
Method to Use NPS Calculator
Given below are the details the NPS calculator will require:
- Your current age and the age you want to retire must be entered.
- The amount that you have invested towards NPS every month.
- The returns that are expected by you from your investment.
- The total number of years over which you would like to receive a pension after your retirement.
- The percentage cannot be less than 40% if you wish to withdraw the money after you reach the age of 60 years and it cannot be less than 80% if you want to withdraw the money before you reach the age of 60 years.
- After your retirement, the expected interest rate of the annuity investment is the amount that you will earn from your pension.
- For more information, Check out related articles NPS Tier 1, NPS Tier 2 & PFRDA
How to use an NPS calculator?
Calculators are found widely across the internet and certain banks even offer calculators of their own. These calculators offer close estimates and are very easy to use. This online tool is quite simple to use and can be used any number of times for free. Here is a step-by-step guide on how to use the NPS calculator:
- First, enter your current age or the age at which you start making contributions towards NPS.
- Then, input your retirement age which is usually 60 years.
- Depending on the age at which you begin NPS contribution, the total investing period will be automatically tabulated by the tool. For example, if your current age is entered as 35 and the retirement age is 60, then the total investing period will be 25 years.
- Enter your monthly contribution towards NPS, it can be as low as Rs.1,000.
- The interest earned is on a monthly compounding basis. Enter the expected rate of interest or return on your NPS investment.
- Finally, you will get a summary of your NPS investment with details such as:
- Principal amount
- Interest earned
- Pension wealth generated
- Total tax saved
To find out how much returns you will get from investing in annuity, input the percentage (%) of pension wealth to be invested in annuity and the rate of interest on annuity in the tool.
You will get a summary of the lump sum amount withdrawn, pension amount invested, and pension per month post retirement.
What are the Details Shown by the NPS Calculator?
All your investment details are shown by the NPS calculator. The total amount earned at the time of maturity, the interest earned, and the total amount that has been invested by you are shown as well.
Details such as the amount invested by you to earn a monthly pension and the total amount that is withdrawn by you are also shown. According to the returns that you expect at annuity, the NPS calculator shows the monthly pension that you will receive.
Advantages of Using the NPS Calculator
The main advantages of using the NPS calculator are mentioned below:
- Results are accurate when compared to manual calculations.
- Future planning is possible since you will know the pension amount.
- Saves time.
- One-stop website to calculate the NPS amount.
The calculator generates a summary of your pension account at the time of retirement with the total amount you would have contributed during the period and the corpus generated on maturity. Also, the NPS calculator computes your expected monthly pension that you would receive based on the returns you expect on the Annuity.
You may also like to read - Top 5 Mistakes To Avoid Before Buying A Retirement Plan
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.