How to Check Old Age Pension?

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Retirement and pension plans are financial instruments that can shape your hard-earned income into savings for your post-retirement life. It comes in various forms to cater to a multitude of savings and investment goals, enabling a financially stable retired life.

Retirement is a time when you can finally unwind and realize your long-held ambitions. However, if you are financially unprepared, it can be a difficult time. As a result, it is in your best interest to consider a pension plan, also referred to as a retirement plan, and understand how important it is at a young age. You will have more time to start saving for your retirement if you do so.

Old age pension plan is an investment plan where you put away a part of your savings is for a specific period. It can help you provide a regular income after retirement. NPS or National Pension System is an old age pension plan available for the Indian citizens. It is an investment scheme regulated by the PFRDA (Pension Fund Regulatory and Development Authority) and the Central Government.

NPS is a retirement savings scheme designed to help its subscribers make optimal decisions for their future. Under this plan, the savings are pooled into a pension fund, which are invested by the PFRDA managers into diversified portfolios including government bonds, bills, shares, and corporate debentures. These investments grow and accumulate over time depending on the returns earned.

To help you understand how old age pension works, we have listed down some features:

Under the National Pension scheme, it is an individual's choice on how they want to invest their hard earned money. NPS offers multiple investment options to choose from. In case you do not want to exercise a choice, your money will be invested as per the Default choice of "Moderate Life Cycle Fund" under "Auto Choice" option, where money will get invested in various type of schemes as per subscriber's age. The NPS offers two approaches to invest your money:

Active choice:-(Asset Class E, Asset Class C, and Asset Class G and Asset Class" A")

You will have the option to actively decide as to how your NPS pension wealth is to be invested in the following three options:

  Asset Class E - Investments in predominantly equity market instruments.

  Asset Class C- investments in fixed income instruments other than Government securities.

  Asset Class G - investments in Government securities.

 Asset class A: Investment in Alternative Investment Schemes including instruments like CMBS, MBS, REITS, AIFs, InvIts etc.

You can choose to invest your entire pension wealth in C or G asset classes and up to a maximum of 50% in equity (Asset class E) and up to a maximum of 5% in asset class "A". You can also distribute your pension wealth across E, C, G and A asset classes, subject to such conditions as may be prescribed by PFRDA.

Now that you know some rules about old-age pension plans, here is what you must know about old age pension rules related to a government employee.

1. According to the National Pension Scheme, people from all sectors be it corporate or government, are eligible for the NPS. This will help you to secure your future post-retirement.
2. The minimum eligibility period for receipt of pension is 10 years. A Central Government servant retiring in accordance with the Pension Rules is entitled to receive pension on completion of at least 10 years of qualifying service.
3. With effect from 1, January 2006, pension is calculated with reference to the last basic pay or average of the basic pay drawn during the last 10 months of the service, whichever is more beneficial. The amount of pension is 50% of the emoluments or average emoluments whichever is beneficial.
4. The minimum pension presently is Rs. 9000 per month. Maximum limit on pension is 50% of the highest pay in the Government of India (presently Rs. 1,25,000) per month. Pension is payable up to and including the date of death.

If you’re wondering how much you need to save for retirement, there is no right answer, as it differs from one person to another. Moreover, while a specific savings amount might be sufficient for you, it might come close to nothing for the next person. However, there are some aspects that you can evaluate to figure out how much you should save for your retirement years, which are:

• It goes without saying that the earlier you start saving, the better. Therefore, start by considering your age when you start saving. For instance, if you are 30 years old and investing around 20-30% of your monthly income, you will be able to save sufficient funds.
• Next, evaluate your monthly expenses, credit card bills, EMIs, and other daily expenditure so you can get by with your savings comfortably during retirement.
• When it comes to retirement planning and savings, it is also vital to consider all your long-term investments, as it will give you a clear idea of how much savings will be sufficient once you retire.
• Lastly, think about the lifestyle you wish to lead post-retirement. For instance, if you plan on travelling/exploring new countries after retirement, you might need a larger savings fund. However, if you wish to stay indoors and spend time with your loved ones, you can get by with less. Regardless, it is crucial to have sufficient financial backup for emergencies.