NPS Calculator (National Pension Scheme)

The National Pension Scheme is a government-regulated, market-linked retirement savings scheme open to all Indian citizens between 18 and 70 years of age. Your contributions are invested across equity, corporate bonds, and government securities based on your chosen allocation, and the corpus grows until you retire, at which point part of it converts into a lifelong monthly pension.

Accumulation phase: this calculator treats your monthly contribution as a growing annuity invested at your expected rate of return until retirement, using the standard future value of an annuity formula: FV = P × [((1+i)ⁿ − 1) / i] × (1+i), where P is the monthly contribution, i is the monthly rate of return, and n is the number of months remaining until retirement.

Worked example: a monthly contribution of ₹5,000, invested for 30 years at an assumed 10% annual return, grows to roughly ₹1.13 crore at retirement — of which around ₹18 lakh is your own contribution and the rest is investment growth, illustrating how much compounding does the heavy lifting over a long NPS horizon.

Withdrawal rules: at retirement, current NPS rules require you to use at least 40% of your accumulated corpus to purchase an annuity, which pays you a regular pension for life. The remaining amount, up to 60%, can be withdrawn as a lump sum and is entirely tax-free. If you choose to annuitize more than the mandatory 40%, your monthly pension will be higher but your immediate lump sum will be smaller.

Pension estimation: the monthly pension shown here is estimated simply as (Annuity Corpus × Annuity Rate) ÷ 12. Actual annuity payouts depend on the specific annuity plan and provider you choose at retirement, your age, and whether you opt for a with-spouse or return-of-purchase-price variant, so treat this as an approximate figure.

NPS also offers tax benefits under Section 80CCD(1) (part of the overall 80C limit) and an additional ₹50,000 deduction under Section 80CCD(1B), available only under the Old Tax Regime. Employer NPS contributions under Section 80CCD(2) remain available under both the Old and New Tax Regimes, making it one of the few deductions the New Regime still permits.

1. Choosing the New Tax Regime and expecting the 80CCD(1B) deduction. The additional ₹50,000 NPS deduction under Section 80CCD(1B) is only available under the Old Regime — under the New Regime, only employer contributions under 80CCD(2) remain deductible.

2. Not adjusting equity allocation as retirement approaches. A high equity allocation is fine for a 25-year-old with decades to ride out market cycles, but the same allocation close to retirement exposes the corpus to sequence-of-returns risk right when you need stability — either use Auto Choice or actively reduce equity exposure yourself as retirement nears.

3. Underestimating the mandatory annuity requirement. Many people plan around withdrawing their full corpus at retirement, forgetting that at least 40% must go into an annuity — plan your retirement income expectations around the annuity-adjusted lump sum, not the full projected corpus.

4. Ignoring annuity provider and plan differences. Annuity payout rates vary between insurance providers and plan types (with-spouse, return-of-purchase-price, etc.) — the pension estimate here is illustrative; compare actual annuity quotes closer to retirement rather than relying on a single assumed rate for decades.

5. Treating the assumed return rate as guaranteed. NPS returns are market-linked, not fixed — a long-term projection using a single assumed rate (commonly 9-10% for equity-heavy allocations) is a planning estimate, not a promise, and actual results will vary with market performance.