NPS Calculator

What is the National Pension System (NPS)?

The National Pension System (NPS) is a voluntary, market-linked retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). You contribute during your working years, professional pension fund managers invest the money across equity and debt, and the accumulated corpus provides a lump sum plus a regular pension after retirement. It is open to all Indian citizens aged 18–70 (including NRIs), whether salaried or self-employed.

PRAN, Tier I and Tier II accounts

On joining you receive a Permanent Retirement Account Number (PRAN) that stays with you for life. NPS has two account types:

• Tier I — the core retirement account. It has a lock-in until age 60, carries all the tax benefits, and follows the withdrawal/annuity rules described below.
• Tier II — a voluntary, flexible add-on with no lock-in and no tax benefit for most subscribers (government employees have a tax-saving locked variant). You can open Tier II only if you already have an active Tier I account, and you can withdraw from it any time like a mutual fund.

Where your money is invested

NPS lets you spread contributions across four asset classes:

• Equity (E) — stocks, for long-term growth (capped at 75% of the portfolio).
• Corporate debt (C) — bonds of companies and PSUs.
• Government securities (G) — the safest, government-backed bonds.
• Alternative assets (A) — REITs, InvITs and similar (Active choice only, up to 5%).

You can pick the split yourself (Active Choice) or let it adjust automatically with age (Auto Choice / lifecycle funds), which gradually reduces equity as you approach retirement.

Tax benefits of NPS (Sections 80CCD)

NPS offers some of the most generous tax deductions available to individuals:

• Section 80CCD(1): your own contribution, within the overall ₹1.5 lakh limit of Section 80C (10% of salary for employees, 20% of gross income for the self-employed).
• Section 80CCD(1B): an additional ₹50,000 deduction over and above the ₹1.5 lakh 80C ceiling — exclusive to NPS.
• Section 80CCD(2): your employer's contribution, deductible up to 10% of salary (basic + DA) — 14% for government employees, and 14% is also allowed for others who opt for the new regime. This is over and above the limits above.

Important: under the new tax regime, the 80CCD(1) and 80CCD(1B) self-contribution deductions are not available — only the employer contribution under 80CCD(2) is. Under the old regime all three apply.

Maturity, withdrawal and the annuity rule

At the normal exit age of 60 (extendable to 75):

• Up to 60% of the corpus can be withdrawn as a lump sum, completely tax-free.
• At least 40% must be used to buy an annuity from an insurer, which pays you a regular pension. The pension is taxable as income in the year you receive it.
• If the total corpus is ₹5 lakh or less, you may withdraw the whole amount without buying an annuity.
• Premature exit (before 60): at least 80% must go towards an annuity and only 20% can be taken as a lump sum.
• Partial withdrawals (up to 25% of your own contributions) are allowed after 3 years for specific needs such as higher education, marriage, a house, or serious illness.

NPS vs EPF vs PPF

NPS is market-linked and can deliver higher long-run returns, offers the unique extra ₹50,000 deduction, but locks a minimum 40% into an annuity and gives a taxable pension. EPF provides a fixed government-declared return with an employer match and is fully tax-free (EEE) after 5 years, but is tied to salaried employment. PPF is a safe, fully tax-free 15-year scheme open to everyone, without an employer contribution. Many investors combine all three. Estimate your provident-fund balance with the EPF Calculator.

How this NPS calculator works

Enter your monthly contribution, current and retirement age, the expected annual return, the share of the corpus you will put into an annuity (minimum 40%), and the expected annuity rate. The calculator compounds your contributions monthly to project the corpus, splits it into the lump sum and annuity portions, and estimates the monthly pension the annuity could pay.