All About the Kuvera NPS Calculator | Know How Much Money You Will Have After Your Retirement

The National Pension Scheme, or NPS, as it is commonly known, has gained popularity in recent years. Employees from the public, private, and unorganised sectors can avail themselves of the benefits of this scheme.

The National Pension Scheme, or NPS scheme, is a voluntary, defined contribution retirement savings scheme created to help subscribers make the best choices for their future via systematic saving throughout their working careers.

The scheme allows people to invest a certain amount in their pension account regularly until their retirement. Once the investor reaches retirement age, they will receive a monthly pension.

The returns suggested by NPS are relatively higher than other investments such as PPF or FDs. The NPS is probably one of the best investment options for tax savings, protection from inflation, and other benefits.

What Is Kuvera NPS Calculator?

Kuvera’s NPS Calculator is an easy-to-use online tool for calculating NPS pension amounts, in order to empower NPS investors to evaluate the extent of their retirement corpus.

Also, you can enter different details to see how they impact your future savings. For example, you can enter a particular amount to see how it impacts the amount you need to save each month.

Anyone eligible to invest in the scheme may use the NPS calculator. According to the guidelines, any Indian citizen between the ages of 18 and 60 can invest in the NPS scheme. To begin investing in the scheme, the person must provide PAN details and KYC (Know Your Customer) along with identity and address proof.

Kuvera’s NPS Calculator or Kuvera NPS Scheme Calculator is a great online tool that will enable you to calculate the monthly pension for the future and potential investment corpus made through the NPS account.

How Do I Use The Kuvera NPS Calculator?

The calculator will need the following details to determine how much corpus you will accumulate:

1. Date of Birth: Your current age, which must be more than or equal to 18 years of age.

2. Contribution Age: The age at which you start investing.

3. Contribution: The amount you intend to invest in the scheme.

4. Expected Return on Investment (ROI): Return percentage that you expect to earn from your NPS investment.

How Does Kuvera's Online NPS Calculator Work?

You can view the specifics of your investment using the Kuvera’s NPS Calculator. It will reflect your investment amount during the scheme's accumulation period, your earnings, and the total corpus generated at maturity.

The Kuvera’s NPS Calculator also displays the breakdown of your lump-sum withdrawal and the sum that is reinvested for you to get a monthly pension. It also displays the amount of your monthly pension, which is determined by the predicted annuity returns. The actual returns may differ from the projected returns due to various factors such as changes in annuity rates, changes in the investment markets, etc.

Kuvera’s NPS calculator is a helpful tool for all investors as it gives them an idea of how their investments are likely to grow over time. It also helps them understand the scheme and make informed decisions about their retirement planning.

The Formula for Calculating the National Pension Scheme

The formula for calculating NPS is as follows: A= P(1+ R/N)nt

Where the variables are as follows;

A= Maturity value

P= Principal invested

R (r)= Rate of interest p.a.

N (n)= No. of times the interest compounds

T (t)= Total No. of years (tenure)

Let’s understand the NPS formula better with the help of an illustration:

Aditya, who is aged 30, wants to use the NPS calculator as he is looking to invest in NPS for his retirement years. He wants to invest Rs 2,000 per month. Aditya will be able to contribute for the next 30 years (assuming the retirement age is 60) towards the scheme and expect a return on investment (ROI) of 10% per annum. In the same line, he would like to purchase an annuity for 50% and expect a 6% rate of return on the annuity.

According to the Kuvera NPS calculator, Aditya's pension account at retirement will be as follows:

Total investment: Rs. 7,20,000/-

Total corpus generated: Rs. 45,58,651/-

The Kuvera NPS calculator would also generate a summary of his pension account:

Lump sum value: Rs. 22,79,325/-

Annuity value: Rs 22,79,326/-

Expected monthly pension: Rs 11,397/-

Note: The illustration is purely indicative and does not guarantee the actual figures.

Is the National Pension Scheme (NPS) better than the Public Provident Fund (PPF)?

The National Pension Scheme, or commonly known as the NPS scheme, is a retirement benefit scheme established by the Government of India to provide all subscribers with a steady income after retirement. It is governed by the PFRDA (Pension Fund Regulatory and Development Authority).

The aim of the PPF scheme is to offer investors a way to save money and grow their wealth over time with high returns. It is backed by the government of India and is therefore one of the most secure investment solutions available to individuals.

The PPF can be used for various objectives; it is not just a pension or retirement instrument. On the other hand, the NPS is a savings plan designed specifically for retirement. We compare them below on several factors:

Based on other criteria like returns, safety, and taxation, let us tell you how NPS is different from PPF.

1. Safety

The NPS is not a fixed return vehicle. However, it is strictly regulated by the PFRDA (Pension Fund Regulatory and Development Authority) and is unlikely to encounter significant difficulties due to fraud or misconduct.

The government determines the fixed returns for the PPF. The government also makes use of PPF funds, and therefore, PPF has minimal default risk.

2. Maturity

In terms of maturity, PPF has a lock-in period of a minimum of 15 years that can be further extended in blocks of five years for an unlimited number of times.

However, NPS is more focused on retirement, and as a pension scheme, it matures when the investor reaches 60 years of age. Additionally, you can withdraw only 25% of the invested amount before reaching maturity. They are allowed for reasons including marriage, higher education of kids, constructing or buying a home, or medical expenses.

3. Taxation

Investments up to Rs. 1.5 lakh are eligible for tax deductions under Section 80C of the Income Tax Act. Also, PPF investments are under the Exempt-Exempt-Exempt (EEE) category.

If you are a working professional, you can benefit from NPS tax deductions by investing in the scheme. Any individual who is a subscriber to NPS can claim a tax benefit under Section 80C of the Income Tax Act.

Section 80C: You may be entitled to a tax exemption for your NPS contribution of up to Rs 1.5 lakhs under Section 80C of the Income Tax Act.

An additional deduction for an investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B).

In NPS, users can receive up to 60% of their corpus as a lump sum at retirement, which is completely tax-free. Even the remaining 40% can be tax-free if it is used to purchase an annuity plan. The remaining amount needs to be placed in an annuity that will provide consistent income for the remainder of one's life. Even though the income from the annuity is taxable at the relevant slab rate, this sum is excluded from taxes.

4. Focus on Retirement

Although it is not expressly designed for retirement, the PPF can contribute to that goal. For instance, you could construct a PPF account for your minor kid, which would mature once they reach adulthood.

On the other hand, the NPS scheme is primarily for retirement purposes. Only those over the age of 18 are permitted to open NPS accounts.

Conclusion

We hope this article helped you understand how much money you will accumulate at retirement. You can also plan for your other financial goals, like planning for your child's education, buying a home etc. using Kuvera's goal planning tool.

At Kuvera, we understand the importance of your savings and wealth and offer you a technology-driven platform for your personal financial planning and wealth management.

On Kuvera, you can plan your goals and invest in direct mutual funds, FDs, Indian stocks and US stocks without paying any commission. You can also track you external investments, making managing your portfolio a piece of cake. Our advanced AI helps you make the right investment decision based on your profile, goals, and risk-taking ability.

FAQs

How does the Kuvera National Pension Scheme (NPS) Calculator help?

• It simplifies the calculation of retirement corpus and other NPS pension fund information.

• Helps with overall financial planning by calculating retirement benefits.

• The Kuvera online NPS calculator is accessible from any web-enabled mobile device or laptop computer.

Is there a minimum contribution required for the NPS?

The minimum contribution required for the NPS is Rs. 500 per annum.

What are the different types of investment options available under the NPS?

In NPS, there are multiple Pension Fund Managers (PFMs), investment options (Auto or Active), and four Asset Classes i.e. Government Bonds, Equity, Alternative Investment Funds, and Corporate debt.

How do I check my NPS balance?

You can check your NPS balance by logging into your account on the NPS website. You will need your Permanent Retirement Account Number (PRAN) to log in.

What are the different types of NPS accounts available?

The two account categories that NPS offers are Tier-I and Tier-II.The pension account with limited withdrawal facilities is known as a Tier-I account. The Tier-II account is a voluntary account that offers liquidity for investments and withdrawals. It is allowed only if the subscriber has a Tier-I account that is active.

Which bank is best for NPS?

The best bank for NPS will depend on your individual needs and preferences. Some factors to consider are the fees charged by the bank, the interest rate offered on deposits, and the level of customer service provided. Compare different banks to find the one that best suits your requirements.