New Pension Scheme (NPS) | Check the Proof, How much Pension a Bank Probationary Officer would draw after 30 years?

 

New Pension Scheme, NPS, Proof, Corpus, NSDL, CRA, Bank, PFRDA, EPSO

Government of India made a breakthrough when they launched New Pension Scheme (NPS) for all the government employees and subsequently for all the employees working in Central, State or  Public Sector Undertakings (PSUs) by saving huge amount of money paid otherwise in Old Pension System. Does it mean that NPS is not useful? Let's find out!

An employee working in one of the Public Sector Bank has been contributing 10% of her salary towards Corporate CG plan offered by LIC and SBI Pension Funds under NPS since 2012 and equal amount is being contributed by her employer. Present status of her Permanent Retirement Account Number (PRAN) maintained with Central Recordkeeping Agency (CRA-NSDL) looks like this as on 31st October 2020 -

New Pension Scheme, NPS, Proof, Corpus, NSDL, CRA, Bank, PFRDA, EPSO

Further, She told us that at present contributions are being made towards SBI Pension Funds Corporate Group Scheme and the scheme was selected by her employer which is the case with all her colleagues. On Return on Investments (ROI) front, picture of her NPS investments looks like this as on 31st October 2020 -

New Pension Scheme, NPS, Proof, Corpus, NSDL, CRA, Bank, PFRDA, EPSO

As can be seen in the above snapshot, XIRR of her NPS investment is staggering 9.88% p.a. and return on investment during last financial year is astronomical 30.08% p.a. 

As per analysis of Portfolio of SBI Pension Fund Corporate Group Scheme, it is observed that approximately 10% is invested in listed equity shares and rest 90% is invested in Central & State Govt. securities, bonds offered by PSUs and Private sector entities. Out of this, 0.05% has slipped to NPA as on 31st October 2020.

With the help of online calculators available, we have conservatively calculated the amount which she would accumulate on her retirement after 30 years from now. Her present monthly contribution including her employer's share is approx. Rs.15000. We have assumed that her average monthly investment to NPS for next 30 years will be around Rs.17000 per month -

 

New Pension Scheme, NPS, Proof, Corpus, NSDL, CRA, Bank, PFRDA, EPSO

So at modest rate of 7% per annum, she would accumulate a humongous amount of Rs. 3.32 Crores. As per NPS rules, one can withdraw 60% of accumulated corpus and balance 40% has to be invested in annuity offered by one of the pension houses like SBI, LIC, ICICI, Kotak, HDFC, Canara HSBC etc.

Amount which she would withdraw is estimated at Rs. 1.99 Crores and balance amount will be invested in annuity. Monthly amount paid from annuity is calculated as per annuity calculator available at NPS-CRA-NSDL -


New Pension Scheme, NPS, Proof, Corpus, NSDL, CRA, Bank, PFRDA, EPSO

As per above calculation, SBI and LIC may provide monthly pension of Rs.50,000 to Rs.60,000 based on present interest rate scenarios. It is obvious that 30 years is a long time and anything can go wrong during this time but NPS is the safest option available given the fact that it is regulated by PFRDA and backed by Central Government Guarantee.

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