NPS Calculator

How to use the NPS calculator

Enter your current age, target retirement age (the NPS default is 60, though you can defer up to 75), monthly contribution, expected annual return, the share of corpus you want converted to an annuity, and the annuity rate you expect. The calculator projects the corpus using a standard SIP future-value formula, splits it into lump sum and annuity, and converts the annuity corpus into an estimated monthly pension.

Because NPS is market-linked, every figure the calculator produces is an estimate based on your assumed return rate. Try different return percentages to see a range of outcomes rather than anchoring on a single number.

How NPS works at maturity

Your NPS corpus grows in a Tier-I account across market-linked funds: equity (Scheme E), corporate debt (Scheme C), and government securities (Scheme G), allocated by you or through the auto-choice lifecycle fund. At the normal exit age of 60, PFRDA rules require non-government subscribers to use at least 40% of the corpus to buy an annuity from a PFRDA-empanelled insurer. The remaining amount, up to 60%, can be withdrawn as a lump sum and is entirely tax-free under Section 10(12A) of the Income Tax Act.

The annuity pays a monthly pension for life (and, depending on the plan, to a surviving spouse). The pension is taxed as regular income at your applicable slab rate. The pension amount is fixed when you buy the annuity and does not change with market conditions. That predictability is both the benefit and the drawback: no inflation protection in most plans.

If your total corpus at maturity is below ₹8 lakh, you can withdraw 100% as a lump sum without buying an annuity. Subscribers can also defer exit up to age 75, so the corpus keeps growing before conversion.

NPS Vatsalya: starting pension savings from childhood

Launched in September 2024, NPS Vatsalya allows a parent or legal guardian to open an NPS account for a minor child under age 18. The minimum annual contribution is ₹1,000 (₹250 per month). The account works the same as a standard NPS account: market-linked growth across equity, debt, and government securities funds. When the child turns 18, it converts to a standard NPS automatically.

Time is the main advantage here. Starting at age 5 instead of age 30 adds 25 years of compounding. At a 10% assumed return, those extra years roughly triple the final corpus at age 60. To model this, enter the child's current age in the "Current age" field above and set retirement age to 60.

At age 18, if the accumulated corpus is below ₹8 lakh, the subscriber (now an adult) can withdraw 100% as a lump sum. If the corpus exceeds ₹8 lakh, up to 80% can be taken as a lump sum and the rest must purchase an annuity. If the account continues past 18, the normal NPS withdrawal rules at retirement apply.

NPS tax benefits: old regime vs. new regime

Under the old tax regime, NPS gives you three deductions: ₹1.5 lakh under Section 80C (shared with PF, ELSS, and others), ₹50,000 more under Section 80CCD(1B), and employer NPS contributions under 80CCD(2). Under the new tax regime (default from FY 2024-25), the first two are gone. Only the employer's 80CCD(2) deduction carries over, now capped at 14% of basic salary for all employees from FY 2025-26, up from 10% for private-sector workers. The ₹7.5 lakh aggregate ceiling on employer contributions to NPS, provident fund, and superannuation still applies.

For salaried employees at companies with corporate NPS, 80CCD(2) is one of the few deductions that works in the new regime. If your employer contributes 10–14% of your basic to your NPS Tier-I, that amount reduces your taxable income even if you have opted for the new tax regime. The maturity tax treatment is unchanged: lump sum up to 60% remains tax-free, and annuity income is taxed at your slab rate.

What annuity rate is realistic?

PFRDA-empanelled insurers, including LIC, SBI Life, and HDFC Life, quote annuity rates broadly between 5.5% and 7% per year for life annuities as of mid-2026. The rate depends on your age at purchase, the annuity variant you choose (life only, life with return of purchase price, joint life with spouse), and the insurer. Older subscribers tend to get higher rates because the insurer expects to pay out for fewer years.

The calculator defaults to 6% as a mid-range assumption. Lower it to 5.5% for a more conservative read; go up to 6.5–7% if you plan to defer exit beyond 60. No annuity rate is fixed today for a purchase 20 years away. Rates will differ from today's quotes by the time you retire.

Frequently asked questions