🏦 National Pension System
NPS Calculator – National Pension System Returns
🧮 Calculate Your NPS Corpus
Corpus at Retirement (Age 60)
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Total Invested–
Total Gains–
Lump Sum (60%)–
Annuity (40%)–
Est. Monthly Pension–
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🏦 What is NPS?
National Pension System (NPS) is a voluntary, market-linked retirement savings scheme regulated by PFRDA (Pension Fund Regulatory and Development Authority). It allows systematic investment during working years to build a retirement corpus, with a mandatory annuity purchase to ensure lifelong pension income.
NPS Tax Benefits
| Section | Benefit | Limit |
|---|---|---|
| 80C | Own contribution (combined with other 80C) | ₹1,50,000 |
| 80CCD(1B) | Additional exclusive NPS deduction | ₹50,000 |
| 80CCD(2) | Employer contribution (available in both regimes) | 10% of basic (14% for govt) |
NPS Withdrawal Rules at Retirement
- 60% Lump Sum: Tax-free withdrawal at age 60
- 40% Mandatory Annuity: Must purchase annuity for regular pension income
- Early exit (before 60): Only 20% lump sum allowed, 80% must go to annuity
Related Calculators
📈 NPS Fund Choices — Asset Allocation Options
NPS offers different fund manager choices and asset allocation strategies to match your risk appetite and years to retirement.
| Scheme | Equity Allocation | Risk Level | Best For |
|---|---|---|---|
| Auto Choice – Aggressive | Up to 75% (reduces with age) | High | Young investors, 20+ years to retire |
| Auto Choice – Moderate | Up to 50% | Medium | Balanced approach |
| Auto Choice – Conservative | Up to 25% | Low | Near-retirement, risk-averse |
| Active Choice | Self-selected up to 75% | Varies | Investors wanting control |
💡 Age-Based Auto Reduction: In Auto Choice, equity exposure automatically reduces by 2.5% annually after age 35, gradually shifting to safer instruments as retirement approaches — a “glide path” similar to target-date funds globally.
⚖ NPS vs EPF vs PPF for Retirement
| Feature | NPS | EPF | PPF |
|---|---|---|---|
| Returns | Market-linked, 9-12% | ~8.25% (govt declared) | 7.1% (fixed) |
| Tax on Withdrawal | 60% tax-free, 40% annuity (taxable) | Tax-free after 5yr service | Fully tax-free |
| Liquidity | Locked till 60 (partial exit allowed) | Withdrawable on job change | 15-year lock-in |
| Extra Tax Benefit | Additional ₹50K under 80CCD(1B) | Part of 80C | Part of 80C |
Related Calculators
📊 NPS Tier 1 vs Tier 2 Accounts
| Feature | Tier 1 (Pension) | Tier 2 (Savings) |
|---|---|---|
| Purpose | Retirement savings, mandatory | Voluntary, flexible savings |
| Lock-in | Till age 60 | None — withdraw anytime |
| Tax Benefit | 80C + 80CCD(1B) | None (except govt employees) |
| Minimum Contribution | ₹500/transaction, ₹1,000/year | ₹250/transaction, no annual minimum |
Tier 2 account can only be opened if you already have an active Tier 1 account, and functions more like a flexible mutual fund investment without the retirement lock-in.
📋 NPS Exit Rules by Scenario
| Exit Scenario | Lump Sum Allowed | Annuity Required |
|---|---|---|
| Normal exit at 60 | 60% | 40% |
| Premature exit (before 60, after 3yr) | 20% | 80% |
| Corpus below ₹5 lakh at 60 | 100% | 0% (full withdrawal allowed) |
| Death of subscriber | 100% to nominee | Optional annuity for nominee |
❓ Frequently Asked Questions
What is NPS? +
National Pension System (NPS) is a government-sponsored retirement savings scheme available to all Indian citizens aged 18-70. It offers market-linked returns through equity, corporate bonds, and government securities, with tax benefits under Section 80C and additional 80CCD(1B).
What is the tax benefit of NPS? +
NPS offers triple tax benefit: Up to Rs. 1.5 lakh under Section 80C (combined with other 80C investments), additional Rs. 50,000 under Section 80CCD(1B) exclusively for NPS, and employer NPS contribution up to 10% of basic under Section 80CCD(2) – available even under New Tax Regime.
How much of NPS corpus can I withdraw at retirement? +
At age 60, you can withdraw up to 60% of your NPS corpus as a tax-free lump sum. The remaining 40% must be used to purchase an annuity (pension plan) that provides you regular monthly income for life.
What is the minimum contribution required for NPS? +
Minimum contribution is Rs. 500 per contribution and Rs. 1,000 per year for Tier 1 (retirement) account. There is no maximum contribution limit, though tax benefits are capped as per Income Tax Act provisions.
What returns does NPS typically give? +
NPS returns depend on the asset allocation chosen (equity, corporate bonds, government securities). Historically, NPS has delivered 9-12% CAGR over the long term for equity-heavy allocations, though returns are market-linked and not guaranteed.
Can I exit NPS before retirement? +
Partial withdrawal (up to 25% of own contributions) is allowed after 3 years for specific purposes like education, marriage, medical treatment, or home purchase. Full exit before 60 requires annuitizing at least 80% of corpus, with exceptions for small corpus amounts.