NPS Calculator

How NPS works

The National Pension System is a voluntary, long-term retirement scheme regulated by PFRDA. You contribute regularly to a Tier I account, invested in a mix of equity, corporate bonds and government securities managed by pension fund managers. At 60, you can take part of the corpus as a lump sum, and part must be used to buy an annuity that pays a monthly pension.

At retirement

• At least 40% of the corpus must buy an annuity from an insurer (rules for small corpuses and exits differ).
• Up to 60% can be withdrawn as a lump sum, which is tax-free.
• The annuity pension is taxable as income in the year received.

How the calculator works

It treats your monthly contribution like a SIP growing at the expected return until age 60, then splits the corpus into lump sum and annuity. The monthly pension is estimated as annuity amount × annuity rate ÷ 12. Annuity rates depend on the insurer, your age and the annuity type, and have typically been in the 5–7% range.

Tax benefits

• Old regime: contributions qualify under 80CCD(1) within the ₹1.5 lakh 80C limit, plus an extra ₹50,000 under 80CCD(1B).
• Both regimes: employer contributions to NPS are deductible under 80CCD(2) within prescribed limits, which makes corporate NPS attractive.

Choosing returns

Returns depend on your asset allocation: more equity has historically meant higher long-term returns with more volatility. Use a conservative assumption. Compare with EPF and PPF for guaranteed-return options. NPS rules change from time to time; check PFRDA’s latest rules. Figures are estimates, not guaranteed.

Quick answers

Can I choose my investment mix? Yes, “active choice” lets you set equity, corporate bond and government bond shares within limits, or “auto choice” adjusts them by age. Can I withdraw before 60? Partial withdrawals are allowed after 3 years for specific needs like education, marriage and medical treatment.