How Much Monthly Pension Does NPS Give? | ET Money
ฝัง
- เผยแพร่เมื่อ 2 ก.ค. 2024
- The National Pension System or NPS is amongst the lowest-cost retirement investment options that are currently available in our country
In this video we shall be focussing on the post-accumulation stage of NPS i.e. the pension part, as we examine
• The factors impacting your monthly pension amount
• What’s an annuity
• The types of annuities offered
• The annuity providers
• Pension calculations
► FACTORS IMPACTING MONTHLY NPS PENSION AMOUNT
The National Pension System is different because the amount accumulated by a subscriber depends on two key variables i.e. the contribution made and the returns achieved which are its key differentiators as compared to traditional pension plans
► WHAT IS AN ANNUITY?
An annuity is a financial product which is typically offered by a life insurance company. The way it works is that one would purchase an annuity by paying a lumpsum amount of say 50 lakhs or 1 crores a bit like a fixed deposit and the insurance company would provide the purchaser of that annuity and/or his or her family members a fixed monthly income for a specified period of time
► TYPES OF ANNUITY OFFERED UNDER NPS
While annuity providers continue to innovate on the products front .. our research has put forth 4 different types of annuities that are currently being offered under the National Pension System
1. Life Annuity without Return of Purchase Price
Under this plan, subscribers or annuity buyers will receive a monthly pension during their lifetime and upon the death of the subscriber, these monthly payouts will stop
2. Life Annuity with Return of Purchase Price
There are two parts to this annuity plan the “life annuity” part and the “return of purchase price” part which can also be abbreviated as ROP going forward
Now, the life annuity part works exactly like the basic version i.e. the NPS subscriber shall receive a monthly fixed pension until his or her death thereby ensuring a steady income in the post-retirement years
The second part i.e. the “with return of purchase price” part means that upon the death of the annuity buyer .. the price at which the annuity was purchased, shall be paid back to the nominees as a lump sum
3. Joint Life Annuity
a) Without ROP
b) With ROP
In the first scenario i.e. without ROP, the annuity buyer or subscriber receives monthly pension payments during his or her lifetime and upon the demise of the subscriber, the spouse continues to receive the pension benefit during his or her lifetime
Once the spouse also expires, the contract terminates and the monthly pension payout is stopped
However in the second scenario i.e. joint life annuity with ROP upon the death of the annuity buyer or the spouse whichever happens later the annuity’s purchase price is additionally paid out to the designated nominee
4. Family Income
In this case, after the death of the annuity buyer the spouse will continue to receive pension for his or her lifetime and after the spouse’s demise, the dependent mother, followed by the dependent father of the annuity buyer will receive the monthly pension
If all the eligible annuitants were to expire .. then the monthly payouts would be stopped
Now this plan too comes in a “without ROP” and “with ROP” options so you might want to see the pros and cons of each
Life insurance companies are continuously coming up with more and more options like inflation-adjusted monthly pension, return of balance purchase price, partial pension to second annuitant etc. ..
► Resources
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► Chapters
00:00 Introduction
01:04 Factors Impacting Monthly Pension Amount
02:31 What is an Annuity?
04:31 Types of Annuity
08:12 Monthly Pension Payout Calculation
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Been following you for couple of years....all your contents are great... giving a third dimension view for all the investment products...that most of others won't let us know. 👍 Keep rocking... Thank you sir.
Most welcome and thank you for your continued patronage
Wider aspects of NPS defined in excellent way, Thanks a lot .
Very nice video & very informative! Thank you for the clear explanation!
Always welcome. Thanks for the kind note!
Thanks for the clear explanation 🙂
Very insightful indeed
Definitely an informative video since I didn't knew this much information and a much needed one as well being an NPS subscriber. Thanks for the job well done Shankar and ET Money team 👌👍🏻
Most welcome, Sachin KN. Happy to add to your financial knowledge
Your videos provides excellent insights to the content you are presenting.. Kudos to the ET Money team..!!
Thank you very much. Glad you liked our content
Another of your very informative videos, which should be saved, watched and rewatched. great job.
Wow, thanks! Glad you enjoyed it.
All your videos always super keep rocking et team all the best and God bless you and your team
Thank you very much for your kind appreciation. A sincere uplifting comment gives creators like us a lot of motivation to continue making content. It makes the 4-5 days we put in to make a 15 min piece of content worth it. Thanks!
Very commendable sankar Sir very good information .Thankyou sankar sir.
Always welcome. Thanks for the appreciation
Please make a video with examples of SLW system and the transaction charges one has to bear alongwith tax benefits.
very informative video 👏👏👏
Glad you liked it
Very Informative video.. Thanks.. Have a doubt.. Once choosen the annuity/pension provider the amount of pension money is fixed or variable???
Kindly make a video on VPF
The talk has no full stop comma, does attract to listen and make proper understanding.
Hello Sir. learning a lot from you. I just retired and am looking to lock down an Annuity plan. Have a question. I read somewhere that all Insurance companies come under IRDAI or are regulated by them, so even if I pick a well known private player, it should be ok? Please can you add some light to that topic ? Thanks in advance
Now a day nps current value is going below investment. Due to stock market fall is it still good to continue to invest in nps(my case i opted agressive auto choice mode )
I feel SIP is better option than NPS. I mean NPS is Risky too. So is Sip. But returns are far more better. SWP should be done during retirement. I would put 50% of my savings in SIP, Rest 50% Insurance, PF, NPS and etc
thanks for a great video! do we have to chose annuity provider from one of the NPS fund managers or one can go out & select one from the wider market?
I have a quick question..if one has started NPS and after few years due to some circumstances, not able to contribute in NPS..will the accumulated find in NPS will be there till 60 years and then one can avail annuity too ??
Very informative... plz consider making a video on whether to park the 60% of lumpsum money somewhere like FD's,bonds or to choose 100% annuity. If possible give us a comparison on which option might get us higher pension... Thanks
Thank you.
Sir, Is it advisable to switch from EPF to NPS for a salary falling under heights tax slab, because most of the the 80C limit is exhausted in EPF saving no much space for ELSS to earn that extra returns..
My age is 60, my total value of NPS is 5,25,000/- the question is 1) How much amount I can withdraw as lump sum and how much pension (tentatively) i will get, pls reply to me.
Hi, When is the decision of Annuity options decided at the time of Subscription of NPS or Post retirement the decision is made for Annuity Options? Also, is there an options to change Annuity preferences as of the 4 highlighted??
Great explanation
Can I invest in both NPS AND PPF ?
Yes
If i have exhausted the Rs 1.5 lakh limit under Section 80C, then additional tax can be saved by investing only Rs 50,000 in NPS under 80ccd 1b
Shankar sir nice video as always .. let's say we choose to get 60% of our corpus back and purchase a annuity for 40% what would be the best way to ensure we get monthly income from 60% ? I'm asking this for senior citizens in general
Thank you. Haven't done research on this but I know many senior citizens (my parents included) who invest in AAA rated bonds for this. They get monthly income from these bonds which is almost always higher than bank FD rates. Of course they are careful to diversify across instruments like bonds, FDs, gold, even equities to keep risk in check. Pls find out more on corporate bonds and see if that suits you.
@@ETMONEY cool thanks sir .. one more request .. not urgent though .. can you do a update on ULIPs for this year .. based on how ULIPs are priced and their fund performance.. a shorts will do fine ☺️
@@vvgame We have a video on ULIPs that I really like. Pls check this out: th-cam.com/video/zssBmmlpqu4/w-d-xo.html
Hi Sir, in the "Life Annuity with Return of Purchase" section you said, "on death of subscriber, nominee will get Purchase Price of Annuity". Can you please clarify what does "Purchase Price of Annuity" amount exactly. Which one of the below 2 options
1. Only Total Contributions made by the subscriber
2. (Total Contributions + Profits) made by the subscriber
P.S: Awesome videos, I think I have watched almost all of your videos .. Now I am revising once again :)
Thank you very much for your kind appreciation
The purchase price of annuity refers to the single lumpsum payment you make at the beginning. E.g. say, you have accumulated 50 lakhs in your NPS by the time you retire at 60 years. While you need to put a minimum of 40%, lets say you put 100% of this amount towards annuity. While means 50 lakhs is your purchase price .. so a cheque of 50 lakhs will be cut towards a life insurance company who would take this lumpsum amount and start paying you monthly pension depending on the annuity plan you pick. Hope this clarifies
@@ETMONEY 😊 Got it, thanks!
@@ETMONEYwhen do we need to pick service provider and annuity option? Is it at the time of retirement? Or is it at beginning?
if we start at 38 and stop for 5yrs paying to NPS scheme still do we get pension, share flexible calculator to know how much we recieve
Old pension scheme state government employee. Can I open NPS account or not?
What if I keep investing in NPS from age of 35 to age to 55 and die. What will happen to entire investment amount? Is annuity plan chosen at the age of 60 or much before? What kind of interest rate can we expect after 30 years when retirement is about to begin? Rather than saving tax of 30% with 50000/- NPS investment if I pay the tax and invest remaining amount of 70% in let’s say blue chip mutual fund then which one will give a better return? Can we compare annuity with SWP?
1. Die at 55 --- we answered this in another video, pls watch at th-cam.com/video/w0ih8scnEz4/w-d-xo.html
2. Interest rate after 30 years --- please check with annuity provider
3. Which one better --- please use excel sheet to determine this with assumptions
4. SWP v Annuity -- Maybe you can compare life annuity but not ROP options
When to choose an Annuity plan I.e at time of opening NPS a/c or at retirement age?
It is compulsory for the NPS Subscribers to purchase an annuity product from empanelled ASPs at the time of Superannuation and Pre-mature exit. npscra.nsdl.co.in/faq-annuity-service-providers.php
After investing, how many days it will take get reflected in our NPS account?
I have invested 2 days back, still no update abt the investment in the account
Can someone help on this?
When to add annuity sir?
Next topics for nps series:
1. Interest credit calculation.
2. How to do profit booking by rebalancing the asset allocation
3. How & when to invest to get desired NAV
4. How to open NPS account online/paperless
#etmoney #nps
@ET money
Can we get annuity accumulated amount after pensioner demise to their heirs
Which is best Mutual funds or INDIVIDUAL stocks? For beginners 15 years I’m having plans to invest monthly 20000 rs can invest?
Pls check out ET Money for ranking and ratings
Sir what is your view on Leadoff, a platform to buy unlisted shares like RELIANCE RETAIL, HDB FINANCIAL, CSK
Make a video if possible .
Sorry, hadn't heard of them before. Will see what can be done, thx
@@ETMONEY thanks for reply 👏
1st comment 😛
Hi Sir, what is the Tax on Monthly Pension from annuity
From what we have read, it's taxable per one's income tax slab
But NPS contribution has initial charges 3.5%(Including GST), means whatever the return NPS will give in future it has cost of approx 3.5% in present. Pls correct me if I am wrong.
Don't believe it is so high, else why would 1,00,000+ crores of non-government individuals subscribe to NPS. We have covered this in a couple of blog posts, have a look:
1. www.etmoney.com/help/national-pension-system/about-nps/what-are-the-other-charges-paid-by-subscriber-for-maintaining-the-nps-account
2. www.etmoney.com/pension/nps-contribution#nps_charges
Also pls take into account the payment gateway charges when making payment through credit cards. Its almost 1%.
For 30% tax slab individual, is NPS good investment over index mutual fund?
NPS returns 10-11% over 30 year period while Index funds have returned upwards of 15%
Factoring in tax saving, many investors should lean on NPS. For more info on performance data with index funds, watch out video on Best NPS Managers. Link in description
For every 50k in nps, we get 15k in tax deduction. Add this to 10% return of year.. its much higher than index funds..
Also if u want higher returns, plz choose aggressive category..
Which plan better select to open NPS after death of policy holder to get continue pension for nominee.
Dear Sir, my neighbour is a widow since last 2 years and has got a bank balance of 8 lacs from her husband bank account. Sir, in coming 4-5 years she has to get her two daughters married. Sir, with said bank balance in her hand; what is the best lumpsum investment option for her to get bigger maturity amount with minimum tax liability ! Pls elaborate/ educate Sir.
fixed deposit nothig else
Hi. In our opinion, it is advisable for your neighbour to get a proper financial planning exercise done. She has important life goals in the future and it's better to not look at intermittent and sporadic advice for the same. Hope this makes sense
Nps exit annuity is very low return... It should have been swp.
Hi sir , Good informative video...Can we Switch from one annuity Provider to another ?
Thank you. No idea on switching rules, you'll have to check with your annuity provider
Sir i work in High school and get govt aid salary from west bengal can I open NPS account Individual as self employed?
I have subscription of GPF from 2018..
Hi. Sorry, we are not sure of this.
For how many years we should receive pension to make without ROP better than with ROP?
I hope you got the question.
Depends from insurer to insurer.. and also on type of annuity plan. Pls connect with a life insurance co of your choice
@@ETMONEY exactly, can there be a way to calculate it? With current rate of interest.
Because I trust maths more than I can trust insurer agents.
@@divyankbarnwal Life insurance cos offer online quotes, you can access those. We did the same
@@ETMONEY okay will check thanks
Is ROP taxable?
Sorry, we're not sure. Most literature we've read says the pension part is taxable but didnt find much clarity on the ROPP part.
How to increase annuity to 100%, weather annuity amount will pay any intrest
At the time of buying annuity, it is your call whether to use up 40% or 100%.
Sir i am working in private bank since 2011.now i have completed more than 10 years... If i do premature exit. I can get 20% of accumulated amount.. Remaining 80% amount what will happen or for remaining 80% amount shall i get monthly pension from now.. Now my age is 34...
Hi Sir,
You will get 20% as lump sum and rest 80% has to be used to buy a pension (annuity) plan. You will start receiving monthly pension immediately
Agr apne premature exit le liye h nps se to 80 % amount pr pension ki liye contact me
what if my age is 59 and i come to know that i have some terminal illness...and i will die in 2-3 years. Lets say my total NPS amount in 1 crore. In that case also i will have to give at least 40 lakh to some insurance company knowing that i will die in 2-3 years max ?
Please check with the annuity provider or insurance agent for possible options
Sir mind blowing explanation can I get your email ID sir