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NPS Calculator

Calculate NPS corpus, 60% lump sum, and estimated monthly pension.

⚠️ Not financial advice. Results are illustrative only and should not be used as the basis for any investment, tax, or financial decision. Consult a qualified financial adviser or chartered accountant before acting on any figure shown.

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Typical range: 5–7%

How the NPS calculator works

The calculator uses the future value of an annuity-due formula (contributions at the beginning of each period) to project the corpus at retirement. The monthly rate is derived from the expected annual return. At retirement, 60% is taken as lump sum and 40% is used to calculate the monthly pension based on your chosen annuity rate.

NPS vs PPF vs ELSS — which is better?

  • NPS: Best for retirement corpus + pension. Extra ₹50,000 deduction. Lower liquidity. Market-linked returns (8–12% historically).
  • PPF: Safe, sovereign-guaranteed at 7.1%. Full EEE tax treatment. ₹1.5L annual limit. 15-year lock-in with partial withdrawals.
  • ELSS: Highest growth potential (12–15% CAGR). Shortest lock-in of 3 years. Subject to LTCG tax above ₹1L gains. No pension component.

For most salaried individuals, a combination of all three provides both tax efficiency and diversification.

NPS pension funds — Active vs Auto choice

NPS subscribers choose how their corpus is invested. Under the Auto Choice (lifecycle fund), the equity allocation automatically reduces as you age — aggressive (up to 75% equity), moderate (up to 50%), or conservative (up to 25%). Under Active Choice, you manually set allocations across four asset classes: Equity (E, max 75%), Corporate bonds (C), Government securities (G), and Alternative assets (A, max 5%). Younger investors typically benefit from a higher equity allocation for long-term growth.

Who benefits most from NPS

Central and state government employees have mandatory NPS contributions under the National Pension System for government sector. For private sector employees, NPS is most attractive for those in the 30% tax bracket who have already exhausted their ₹1.5 lakh Section 80C limit — the additional ₹50,000 deduction under Section 80CCD(1B) saves ₹15,600 in tax annually. Self-employed individuals and business owners also benefit from the same deductions.

NPS partial withdrawal rules

After 3 years of NPS subscription, Tier 1 account holders can make partial withdrawals of up to 25% of their own contributions (excluding employer contributions) for specific purposes: higher education of children, marriage of children, purchase or construction of a house, and treatment of critical illness. A maximum of 3 partial withdrawals are allowed during the entire tenure. The lump-sum withdrawal of 60% at age 60 is fully tax-free.

Frequently asked questions

What is NPS?
The National Pension System (NPS) is a voluntary, long-term retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It is open to all Indian citizens aged 18–70. Contributions are invested in a mix of equities, corporate bonds, and government securities, and the corpus grows until retirement.
How does NPS work at retirement?
At the age of 60, you can withdraw up to 60% of the total NPS corpus tax-free lump sum. The remaining 40% must be used to purchase an annuity plan from an PFRDA-empanelled life insurance company. The annuity provides a regular monthly pension for life.
What are the NPS tax benefits?
NPS offers three layers of tax benefit: (1) Up to ₹1,50,000 under Section 80C, (2) An additional exclusive deduction of ₹50,000 under Section 80CCD(1B), and (3) Employer contributions up to 10% of basic salary are deductible under 80CCD(2). The 60% lump sum withdrawal at maturity is tax-free. This makes NPS one of the most tax-efficient investment instruments available.
What is an annuity in NPS?
An annuity is a contract where you pay a lump sum to an insurance company in exchange for a regular income (pension) for life. The annuity rate (typically 5–7% p.a.) determines how much monthly pension you receive. Different annuity options are available — life annuity, joint life annuity (covers spouse), annuity with return of purchase price, etc.
What is the difference between NPS Tier 1 and Tier 2?
Tier 1 is the mandatory pension account with lock-in until age 60 (with limited partial withdrawals allowed after 3 years). All tax benefits apply only to Tier 1. Tier 2 is a voluntary savings account with no lock-in — you can withdraw anytime. Tier 2 h tax benefits under the old tax regime (except for central government employees).

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