NPS Calculator
Estimate your National Pension System corpus at retirement, lumpsum withdrawal, and monthly pension. Tier I rules with annuity reinvestment.
Minimum 40% per NPS rules
Typically 5.5–7% from insurers
Estimate only. Actual corpus depends on fund performance, fund manager choice (equity/corporate/govt debt mix), and contribution timing. Annuity pension depends on the insurer and annuity type chosen at retirement.
How NPS corpus and pension are calculated
NPS works in two distinct phases:
Phase 1 — Accumulation: During your working years, monthly contributions grow at a compounded rate (similar to a SIP). This calculator uses the annuity-due formula — contributions are assumed to be made at the start of each month:
Corpus = P × ((1 + r)^n − 1) / r × (1 + r) where P = monthly contribution r = expected annual return ÷ 12 ÷ 100 n = total months until retirement
Phase 2 — Distribution at retirement: The corpus is split into two parts. A minimum of 40% (mandated by PFRDA) must be used to purchase an annuity from a registered life insurer — this generates your monthly pension. The remaining amount (up to 60%) can be withdrawn as a one-time lumpsum, which is completely tax-free.
Annuity corpus = Corpus × Annuity % Monthly pension = Annuity corpus × Annuity rate ÷ 100 ÷ 12 Lumpsum = Corpus × (1 − Annuity %)
The annuity rate is set by the insurer at the time you purchase the annuity — it is fixed for life (for a life annuity option) and typically ranges from 5.5% to 7% depending on market conditions and the annuity variant you choose.
Frequently asked questions
What's the difference between NPS Tier I and Tier II?▼
Tier I is the primary retirement account — contributions are locked until retirement (age 60), and you get tax deductions under 80C and 80CCD(1B). Tier II is a voluntary savings account with no lock-in and flexible withdrawals, but it offers no additional tax benefits (except for central government employees). Most NPS investors use Tier I for tax planning and retirement savings.
What's the tax benefit of NPS?▼
NPS offers one of the highest tax deduction limits: up to ₹1.5 lakh under Section 80C, plus an additional ₹50,000 exclusively under Section 80CCD(1B) — totalling ₹2 lakh per year. At the 30% tax slab this saves ~₹62,400 in tax annually. Additionally, the lumpsum withdrawal at retirement (up to 60% of corpus) is completely tax-free.
Can I take 100% as lumpsum at retirement?▼
Only if your total NPS corpus is ₹5 lakh or less — in that case you can withdraw the entire amount as lumpsum. If your corpus exceeds ₹5 lakh, PFRDA rules mandate that at least 40% must be used to purchase an annuity plan from a registered insurance company, which then pays you a monthly pension. The remaining up to 60% can be taken as a tax-free lumpsum.
What is annuity rate and how does it affect pension?▼
The annuity rate is the annual rate at which the annuity provider (an insurance company) pays monthly pension on the corpus you invest with them. Rates typically range from 5.5% to 7% depending on the annuity type (life annuity, joint life, return of purchase price, etc.) and prevailing interest rates at the time of retirement. A higher annuity rate means a higher monthly pension for the same corpus.
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