NPS (National Pension System) is a government-backed retirement savings scheme in India. You contribute regularly during your working years and receive a pension after retirement.

How much of NPS corpus can I withdraw?

At retirement (age 60), you can withdraw up to 60% of the corpus as a tax-free lump sum. The remaining 40% (minimum) must be used to purchase an annuity for regular pension.

What tax benefits does NPS offer?

Under Section 80CCD(1): ₹1.5L deduction (within 80C limit). Section 80CCD(1B): Additional ₹50,000 deduction (exclusive, over 80C). Employer contribution under 80CCD(2): up to 10% of salary.

What is annuity in NPS?

Annuity is a regular income stream purchased with a portion of your NPS corpus from an insurance company. The annuity rate (6–8%) determines your monthly pension amount.

Can I exit NPS before 60?

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 80% corpus to be annuitized.

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NPS Calculator

Calculate your NPS corpus at retirement, monthly pension, and lump sum withdrawal based on monthly contributions.

Monthly Contribution

₹500₹5.00 L

Current Age

18 yrs59 yrs

Retirement Age

40 yrs75 yrs

Expected Return (% p.a.)

6.0%18.0%

Annuity Purchase (%)

40%100%

Annuity Rate (% p.a.)

4.0%10.0%

Total Corpus

₹2.28 Cr

Monthly Pension

₹45,587

from 40% corpus at 6% p.a.

Lump Sum (Tax-free)

₹1.37 Cr

60% of corpus

Annuity Corpus

₹91.17 L

40% used to buy annuity

Investment Period

30 years

Total Invested

₹36.00 L

Total Returns

₹1.92 Cr

NPS corpus growth over 30 years

Corpus Growth

Age	Total Invested	Corpus
35	₹6.00 L	₹7.81 L
40	₹12.00 L	₹20.66 L
45	₹18.00 L	₹41.79 L
50	₹24.00 L	₹76.57 L
55	₹30.00 L	₹1.34 Cr
60	₹36.00 L	₹2.28 Cr

Tier-1 (this calculator): Tax-advantaged, locked-in account. Mandatory for NPS subscribers. Tax deduction under 80CCD(1) up to ₹1.5L and additional ₹50K under 80CCD(1B). 60% corpus is tax-free on withdrawal; 40% must buy annuity.

Tier-2: Voluntary, flexible account with no lock-in. No additional tax benefit (except for government employees). Can be withdrawn anytime.

Minimum 40% of corpus must be used to purchase annuity as per NPS rules. Returns are illustrative.

About the NPS Calculator

NPS (National Pension System) is India's government-backed retirement savings scheme - a hybrid of a mutual fund and a pension plan with unique tax benefits. You accumulate a corpus until age 60, then withdraw 60% tax-free and buy an annuity for monthly pension with the rest. The equity option (Tier I, Active Choice) has delivered 12-14% CAGR over 10 years, making NPS one of the best long-term retirement instruments available.

NPS Corpus and Pension Calculation

Corpus at 60 = FV(monthly return, months, monthly contribution) · Monthly pension ≈ (40% of corpus × annuity rate) / 12

Annuity rate: 6-7% p.a. from insurance companies · Lump sum withdrawal: up to 60% of corpus, tax-free · Annuity portion: minimum 40%, used to buy pension insurance · Monthly pension = Annuity corpus × Annuity rate / 12

Worked Example

Contributing ₹10,000/month from age 30 to 60 in NPS equity option (12% return)

Monthly contribution:₹10,000

Duration:30 years

Expected return:12% p.a.

Annuity rate:6.5% p.a.

Corpus at 60 ≈ ₹3.5 crore · Tax-free lump sum (60%) ≈ ₹2.1 crore · Monthly pension (6.5% on ₹1.4Cr) ≈ ₹75,800

Tips & Insights

1
Section 80CCD(1B) gives an extra ₹50,000 deduction for NPS contributions, over and above the ₹1.5L limit under 80C.
2
Tier II NPS has no lock-in and acts like a liquid mutual fund - use it for medium-term goals.
3
Active choice allows up to 75% equity allocation until age 50 - use this for maximum corpus growth.
4
Government employees get employer contribution under 80CCD(2) - up to 14% of salary, fully exempt.
5
At withdrawal, only the lump sum (60%) is tax-free. The annuity income is taxable as salary in retirement.

Why this matters for you

NPS combines the best of equity growth with mandatory annuity discipline that prevents retirees from spending everything at once. For someone in the 30% tax bracket, the effective yield on NPS is significantly higher than it appears, because contributions reduce your tax bill immediately while the corpus grows tax-deferred for decades. The extra ₹50,000 deduction alone is worth ₹15,000 per year in tax saved.