About the NPS Calculator

The National Pension System (NPS) is a voluntary, long-term retirement savings scheme designed by the Government of India to enable systematic savings during one's working life. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). This calculator helps you project your future NPS wealth by estimating the total corpus at retirement, the tax-free lumpsum amount you can withdraw, and the potential monthly pension you could receive.

How is the NPS Corpus and Pension Calculated?

NPS is a market-linked product, and the final corpus depends on the performance of your chosen pension fund. The calculation involves compounding your monthly contributions over the investment period until retirement (usually age 60).

Upon retirement, the rules are as follows:

• Lumpsum Withdrawal: You can withdraw up to **60%** of the total corpus as a tax-free lumpsum.
• Annuity Purchase: A minimum of **40%** of the corpus must be used to purchase an annuity plan from an IRDA-registered insurance company. This annuity provides you with a regular monthly pension.
• Pension Amount: The monthly pension you receive depends on the annuity amount and the prevailing annuity rates at the time of purchase. This calculator uses an assumed rate for estimation.

Frequently Asked Questions (FAQ)

Who can invest in NPS?

Any Indian citizen, both resident and non-resident, between the ages of 18 and 70 years can join the NPS. It is mandatory for central government employees (except armed forces) who joined service after Jan 1, 2004.

What are Tier I and Tier II NPS accounts?

• Tier I Account: This is the primary, mandatory retirement account with withdrawal restrictions. Tax benefits are available on contributions to this account.
• Tier II Account: This is a voluntary savings account. Subscribers can invest and withdraw funds at any time without any exit load. There are no tax benefits on contributions to this account.

What are the tax benefits of investing in NPS?

NPS offers a three-tiered tax benefit:

• Section 80CCD(1): Deduction up to ₹1.5 lakh (within the overall limit of Section 80C).
• Section 80CCD(1B): An exclusive, additional deduction of up to **₹50,000** over and above the 80C limit.
• Section 80CCD(2): Deduction on the employer's contribution to NPS (up to 10% of basic salary + DA).

What are the investment choices in NPS?

Subscribers have two choices:

• Active Choice: You can decide the asset allocation mix among four asset classes: Equity (E), Corporate Bonds (C), Government Securities (G), and Alternative Investment Funds (A).
• Auto Choice: This is a lifecycle-based fund where the asset allocation changes automatically based on your age, becoming more conservative as you get older.

Is the pension received from the annuity taxable?

Yes. The monthly pension you receive from the annuity is treated as income and is taxed according to your applicable income tax slab in the year of receipt.