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Nowadays it has become pretty hard to make a saving, but it is very essential. So to keep track of the betterment of your future you must start saving before your retirement. Using a pension calculation formula or basic pension calculator you can easily evaluate a value that you need to save per month for the betterment of your post-retirement age. But while making your pension plans you might come across many queries for instance how much pension will I get? All of such questions are explained below in detail.
A fund of retirement which an employee receives either from the employer, employee, or both, where usually the employer is covering the biggest contribution percentage. When an employee is retired, the employee is paid in the form of an annuity which is calculated on the conditions of pension. Now if the employee has opted for the commutation of pension then the amount of pension is paid in the form of a lump sum to the receiver. With the help of the pension calculation formula, the total pension you will receive can be calculated. You can even use an online pension calculator to estimate the amount you'll be receiving at the end.
A pension plan calculator or a pension calculator analyzes the total amount you will need to accumulate at the time of your retirement. The pension calculator demonstrates the amount of lump sum and the tentative pension which is expected by a subscriber of an NPS after the age of 60 or after the maturation. This depends on the following factors:
Monthly regular contributions
Percentage of the Basic Pension Reinvested corpus to buy an annuity
Rates of returns of the investment along with the annuity for which it is selected
A monthly pension calculator or pension fund calculator helps you to keep an approximate value of the total amount you require to save per month to financially secure yourself in the future. If you are wondering how to calculate pension amount then by using the online pension calculator you can keep yourself updated. To know how is pension calculated, following the given steps:
Search for a basic pension calculator that is available online
Fill in all the required personal details such as birth date, accommodation time, and age of your expected retirement
Then fill in your income details
Finally, input your saving details
Moreover, you can also use another formula to calculate your pension. Let us have a look into it.
Each pension is estimated according to the pension formula which is already set and is free to make the payment on the plan. The retirement calculator of the pension formula is based on the account of your pensionable salary and the total years of your service. In short the longer duration you'll be working and the longer you contribute towards your plan the higher amount of pension you'll be receiving at the end. The basic pension calculator formula used online utilizes the formula:
(pensionable salary × pensionable service)/ 70
If you want to know how to calculate commutation of pension, then the formula is:
Pension commutation formula = Amount of 1 to be commuted x 12 x purchase value for age next birthday. Alternatively, you can also find the table below to ascertain the right commutation value for you.
Here are the commutation values pension of ₹1 per annum. You can adjust the commutation value according to your income to arrive at the appropriate value.
Age next birthday |
Commutation value expressed as number of year’s Purchase |
Age next birthday |
Commutation value expressed as number of year’s Purchase |
Age next birthday |
Commutation value expressed as number of year’s Purchase |
(x) |
(y) |
(x) |
(y) |
(x) |
(y) |
-1 |
-2 |
-1 |
-2 |
-1 |
-2 |
17 |
19.28 |
40 |
15.87 |
63 |
9.15 |
18 |
19.2 |
41 |
15.64 |
64 |
8.82 |
19 |
19.11 |
42 |
15.4 |
65 |
8.5 |
20 |
19.01 |
43 |
15.15 |
66 |
8.17 |
21 |
18.91 |
44 |
14.9 |
67 |
7.85 |
22 |
18.81 |
45 |
14.64 |
68 |
7.53 |
23 |
18.7 |
46 |
14.37 |
69 |
7.22 |
24 |
18.59 |
47 |
14.1 |
70 |
6.91 |
25 |
18.47 |
48 |
13.82 |
71 |
6.6 |
26 |
18.34 |
49 |
13.54 |
72 |
6.3 |
27 |
18.21 |
50 |
13.25 |
73 |
6.01 |
28 |
18.07 |
51 |
12.95 |
74 |
5.72 |
29 |
17.93 |
52 |
12.66 |
75 |
5.44 |
30 |
17.78 |
53 |
12.35 |
76 |
5.17 |
31 |
17.62 |
54 |
12.05 |
77 |
4.9 |
32 |
17.46 |
55 |
11.73 |
78 |
4.65 |
33 |
17.29 |
56 |
11.42 |
79 |
4.4 |
34 |
17.11 |
57 |
11.1 |
80 |
4.17 |
35 |
16.92 |
58 |
10.78 |
81 |
3.94 |
36 |
16.72 |
59 |
10.46 |
82 |
3.72 |
37 |
16.52 |
60 |
10.13 |
83 |
3.52 |
38 |
16.31 |
61 |
9.81 |
84 |
3.32 |
39 |
16.09 |
62 |
9.48 |
85 |
3.13 |
The pension plan calculator works on the principle of the power of compounding. By inputting your details on the pension commutation formula or basic pension formula, you will know the aggregated money that you will accumulate after your retirement.
It is necessary to think about the future after your employment. Provident funds and pensions are not quite enough. ULIP Pension Plan available on Bajaj Markets helps you to save for a secured tomorrow. It is a top-rated pension scheme that ensures returns as high as 25% over an investment period of 5 years. It has tax benefits, high AUM (Assets Under Management), the flexibility of choosing among four different investment portfolios, and the least caste structure.
Annuity- Fixed amount of income that you are entitled to receive once you subscribe to a pension plan
Commutation Pension- It is a portion where the pensioner is paid in the form of a lump sum instead of the pension's periodic payment
IRS- Internal Revenue Service
Pension- An allowance received by the employee after the retirement
Pensionable salary- It is the average salary of the month in the recent 12 months of the service
Pensionable service- It is the total years you have been employed till the day you retire
Accumulation period- The period in which you invest your savings into your pension plan
FAQs Related to Pension Calculator
What exactly is the pension plan?
If you are having a pension plan then you'll get an amount of retirement that you will receive from the provider of your insurance timely. As you retire, a retirement plan or a pension plan in India provides you a regular monthly income.
Can I make an early withdrawal from my pension plan?
Even though the early withdrawal of money before the age of fifty-nine and a half isn't recommended at all as you might have to pay a penalty of 10% above the regular income tax according to the IRS. Although, yes, you can, there are some guidelines for the early withdrawal of your pension plan and those are if you have encountered any sudden disability or you are not able to bear your medical expenses which are above 7.5% of your gross income.
What are the benefits I would get from using a pension contribution calculator?
Using pf pension calculation the following benefits you can avail for the future post-retirement age:
Life expectancy increases
Decreases the stress due to the insufficient pension of the employer
You can freely spend your life without being dependent on anyone
You can pursue your interest even after your retirement without any worries
Can I use a pension calculator in excel?
Yes, you can use the pension calculator in excel.
What if I want to surrender the pension plan before its maturity?
If you wish to surrender the pension plan before it gets matured then a value of complete surrender gets added to your yearly income and you are taxed based on the tax slab.
Can I know how much pension will I get using a pension calculator?
Yes, you can easily get the amount you'll be receiving by using a monthly pension calculator, which will make it a lot easier for you to keep a track of the amount you need to save every month.
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