Is investing in NPS enough for retirement?

National Pension Scheme (NPS) is the government’s retirement cum investment scheme. Through this scheme, an individual can build a big corpus for himself/herself. But, is NPS enough for a tension-free retirement? If it is not enough then where else should you invest? Money9 Helpline hosted Optima Money Manager’s Pankaj Mathpal to resolve all the queries related to NPS and retirement funds.

Rajkumar Saini: My son is 25 years old and started his job a few months back. Could you suggest to me how much he should invest in NPS per month so that he will get enough corpus by the time he retires?

Mathpal: When calculating your retirement corpus you have to first assess how much expenses you have at present. The expenses vary from individual to individual based on lifestyle and aspirations. For a 25-year-old who is starting his/her investment, the person must have at least a 6-7 crore retirement corpus. For this, the individual has to invest mindfully. If your son is starting to invest from an age of 25 years. He can increase the amount of investment as he progresses in life. He can at the present start from an investment of Rs 5,000, but every year he should raise this amount with an increase in salary. Also, I would suggest that don’t allocate all your money to NPS. You can allocate some amount in NPS, it will also give you a tax benefit. You could also invest in a diversified equity mutual fund through SIP

Shubhansh Khanna: What is the benefit of investing in NPS over PPF? Also, what are the tax benefits given in NPS investment?

Mathpal: PPF investment gives guaranteed returns. But over time the returns are not that high. So it doesn’t have the wealth multiplying benefit. For that, you can invest in equity in NPS. So NPS is better in that aspect.