NPS pension calculator: How to draw Rs 2 lakh monthly income

National Pension System (NPS) is a voluntary retirement savings scheme that allows the subscribers to make defined contribution to secure their future in the form of pension. Backed by government, NPS investment gives you an exposure to both equity and debt instruments. Like PPF, EPF, Sukanya Samriddhi, etc., this voluntary contribution pension system is an EEE instrument where you are given income tax exemption on maturity and the whole pension withdrawal amount.

In order to get higher monthly pension post-retirement, experts suggest that investors should start investing in NPS as early as possible. By using the NPS pension calculator, you can calculate how much you need to contribute to make a corpus that can give you a pension of Rs 2 lakh or above per month.

Assuming that someone starts investing Rs 5,000 monthly in NPS at the age of 20 till retirement or say till he or she attains 60 years of age, the NPS calculator suggests that one would get around Rs 1.91 crore lump sum maturity amount and Rs 1.27 crore annuity value that will get re-invested in annuity for monthly pension. So, assuming 6 per cent annual return on Rs 1.27 crore annuity value, one would get Rs 63,768 monthly pension.

There is one more option for investors – they can invest lump sum amount in SWP (systematic withdrawal plan) to enhance their monthly income. Like SIP where an investor invests monthly, SWP allows an investor to use one's wealth with monthly withdrawal facility. By opting SWP, one would be able to withdraw this money for longer period of time expecting at least 8 per cent return.

So, if you are an NPS account holder of 20 years of age, and invest Rs 5,000 per month for 40 years, besides putting lump sum maturity amount of Rs 1.91 crore in SWP, you would be able to get more than Rs 2 lakh monthly pension ( Rs 1.43 lakh monthly from SWP and Rs 63,768 monthly from annuity). However, it must be noted that Rs 63,768 monthly income from annuity will continue till the investor is alive whereas Rs 1.43 lakh from SWP is for 25 years only.