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Formula sheet/NISM Series X-B: Investment Adviser (Level 2)/Retirement Planning
[ RETIREMENT PLANNING ]

NPS Annuitization Rules & Reverse Mortgage Loans

NPS Normal Exit(Age60):Min20%(Non−Govt)/40%(Govt)annuitized;up to60%tax-free lump sum u/s10(12A).\text{NPS Normal Exit} (Age 60): Min 20\% (Non-Govt) / 40\% (Govt) annuitized; \text{up to} 60\% \text{tax-free lump sum u}/s 10(12A).
NPS Premature Exit(<60):Min80%annuitized;up to20%lump sum.\text{NPS Premature Exit} (< 60): Min 80\% annuitized; \text{up to} 20\% \text{lump sum}.
Full Lump Sum Withdrawal Exemption:Allowed if total corpus≤Rs8Lakhs(Normal Exit)or≤Rs5Lakhs(Premature Exit).\text{Full Lump Sum Withdrawal Exemption}: \text{Allowed if total corpus} \le Rs 8 Lakhs (\text{Normal Exit}) or \le Rs 5 Lakhs (\text{Premature Exit}).
Reverse Mortgage Loan(RML):Max monthly payment Rs50,000;Max lump sum50%up to Rs15Lakhs;All receipts exempt u/s10(43).\text{Reverse Mortgage Loan} (RML): \text{Max monthly payment Rs} 50,000; \text{Max lump sum} 50\% \text{up to Rs} 15 Lakhs; \text{All receipts exempt u}/s 10(43).
Variables

Annuity pensions received from the insurance company are fully taxable as income in the year of receipt.

Worked examples
Retirement Living Expenses, Corpus Sizing & Accumulation Savings

A 40-year-old individual currently spends Rs 50,000 per month (Rs 6,00,000 p.a.) on living expenses and plans to retire at age 60 (20 working years left). He expects to live for 25 years in retirement (up to age 85). Economic assumptions: Pre- and post-retirement inflation = 8.0% p.a.; Post-retirement investment yield = 9.0% p.a. Pre-retirement accumulation return on investments = 12.0% p.a. Calculate (1) Living expenses in Year 1 of retirement, (2) Total Retirement Corpus required at age 60, and (3) Monthly savings required during the 20-year accumulation phase.

Taxability of Excess Employer Contributions to PF, NPS & Superannuation

During FY2024-25, an executive's employer contributes: (1) Rs 4,50,000 to Recognised Provident Fund (RPF), (2) Rs 3,00,000 to National Pension System (NPS), and (3) Rs 2,00,000 to an Approved Superannuation Fund. Total employer contribution = Rs 9,50,000. Calculate the perquisite value taxable under Section 17(2)(vii) in the hands of the employee.