Tools To India

NPS Calculator

Enter your monthly contribution and expected return to project your NPS corpus at retirement, and see how the mandatory annuity translates into a monthly pension.

Last updated

₹5K

NPS Tier-I normally matures at 60, with deferral allowed up to 75.

PFRDA rules require at least 40%.

The rate the life insurer will offer at retirement. Unknown today, so this is an assumption.

The result updates as you type. Nothing you enter is saved, sent to a server or shared.

Estimated monthly pension

₹22,793

From a corpus of ₹1,13,96,627 built over 30 years

What builds the corpus

  • Contributed: ₹18,00,000
  • Estimated returns: ₹95,96,627

At retirement

Total contributed
₹18,00,000
Estimated returns
₹95,96,627
Corpus at retirement
₹1,13,96,627

How the corpus is used

Lump sum you can withdrawTax-free up to the prescribed share of the corpus.
₹68,37,976
Used to buy an annuityMinimum 40% under PFRDA rules.
₹45,58,651
Estimated monthly pensionTaxable as income when received.
₹22,793
  • Market-linked returns are not guaranteed. The rate you enter is an assumption, not a prediction, and actual returns will be higher in some years and negative in others.
  • The annuity rate available at retirement is unknown today and depends on interest rates decades from now. Treat the pension figure as illustrative.
  • Pension received from the annuity is taxable as income in the year you receive it.

How this calculator works

The National Pension System is a market-linked retirement scheme regulated by PFRDA. You contribute during your working life, the money is invested across equity, corporate bonds and government securities according to a chosen allocation, and it accumulates until you turn sixty.

What makes NPS different from other retirement savings is what happens at maturity. You cannot simply withdraw everything. At least 40% of the corpus must be used to buy an annuity from a life insurer, which pays you a monthly pension for life. The remainder can be taken as a lump sum, and that lump sum is tax-free up to the prescribed share.

That annuity requirement is the part most projections gloss over. The pension you eventually receive depends on the annuity rate available at the moment you retire — a number nobody can know today, because it depends on interest rates decades from now. The rate in this calculator is an assumption, and a fairly consequential one.

On tax, NPS offers something no other instrument does: an additional deduction of ₹50,000 under section 80CCD(1B), over and above the ₹1.5 lakh section 80C limit, under the old regime. Separately, the employer’s contribution under section 80CCD(2) is deductible under both the old and the new regime, which makes it unusually valuable for salaried employees on the new regime.

The formula

Corpus at retirement

Corpus = C × ((1 + i)ⁿ − 1) ÷ i × (1 + i)

C
Monthly contribution
i
Monthly return = annual return ÷ 12 ÷ 100
n
Months until retirement

Monthly pension from the annuity

Monthly pension = (corpus × annuity share) × annuity rate ÷ 12

This models a simple annuity that pays a level income. Real annuity products vary — some return the purchase price to your nominee, some increase with time, some cover a spouse — and each variant pays a different amount.

Worked example: ₹5,000 a month from age 30 to 60

Rohit contributes ₹5,000 a month from 30 to 60, assumes a 10% annual return, uses the minimum 40% for an annuity and assumes a 6% annuity rate.

Step-by-step calculation for the worked example
Monthly contribution₹5,000
Years of contribution30
Total contributed₹18,00,000
Estimated corpus at 60₹1,13,96,627
Lump sum withdrawal (60%)₹68,37,976
Used to buy annuity (40%)₹45,58,651
Estimated monthly pension at 6%₹22,793

Rohit contributes ₹18 lakh and could end with a corpus above ₹1.1 crore, of which about ₹68 lakh is available as a tax-free lump sum. The ₹22,793 monthly pension is taxable, and would be worth far less in real terms after thirty years of inflation — worth checking against the inflation calculator.

Things worth knowing

  • Market-linked returns are not guaranteed. The rate you enter is an assumption, not a prediction, and actual returns will be higher in some years and negative in others.
  • At least 40% of the corpus must buy an annuity. If the total corpus is small enough to fall under the prescribed threshold, the entire amount can be withdrawn instead.
  • The annuity rate at retirement is unknowable today. A one percentage point difference in that rate changes the monthly pension by roughly a sixth.
  • The lump sum is tax-free up to the prescribed share of the corpus, but the monthly pension is taxable as income in the year received.
  • Section 80CCD(1B) gives an extra ₹50,000 deduction over and above 80C, but only under the old regime. Section 80CCD(2), the employer contribution, is deductible under both regimes — which makes it the most valuable NPS benefit for anyone on the new regime.
  • NPS is genuinely illiquid. Partial withdrawal is allowed only after three years, only for specified purposes, and only up to a limited share of your own contributions.
  • You choose the asset allocation, and it drives the return. An equity-heavy allocation has historically produced more over long periods with more variation along the way; the auto choice reduces equity as you age.

Frequently asked questions

Can I withdraw my entire NPS corpus at 60?
Not normally. At least 40% must be used to buy an annuity that pays a monthly pension for life, and the remaining 60% can be taken as a lump sum. The exception is when the total corpus falls below a prescribed threshold, in which case the whole amount can be withdrawn.
How much tax does NPS actually save?
Under the old regime, your own contribution counts within the ₹1.5 lakh section 80C limit, and section 80CCD(1B) adds a further ₹50,000 that no other instrument offers. Under the new regime those are unavailable, but the employer’s contribution under section 80CCD(2) remains deductible — often the single largest deduction available to a salaried person on the new regime.
What is the difference between Tier-I and Tier-II?
Tier-I is the retirement account: tax benefits apply, withdrawals are heavily restricted, and the annuity rule applies at maturity. Tier-II is a voluntary savings account with no lock-in and no tax deduction for most subscribers. You need an active Tier-I account to open a Tier-II.
Is NPS better than PPF or EPF?
They are different instruments. PPF and EPF give assured, government-declared returns and are entirely tax-free on maturity. NPS is market-linked with potentially higher returns, an extra tax deduction, but a compulsory annuity and a taxable pension. Many people use NPS alongside EPF and PPF rather than instead of them.
What happens to my NPS if I die before retirement?
The nominee receives the accumulated corpus. The rules on whether the full amount is paid out or an annuity must be purchased differ between government and non-government subscribers, so check the provision that applies to your sector.

Sources

Every figure on this page is traceable to the official source below. If a source has changed since the date shown, please tell us and we will correct it.