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Next toolsAssumptions and methodology
Transparent calculation notes for NPS Calculator.
Formula used
The calculator grows each month's contribution at the monthly equivalent of your annual return (CAGR), applies the PFRDA exit rules to split the corpus into a lump sum and an annuity purchase, and shows which part of the lump sum is tax-free.
Methodology
- Add each month's contribution and grow the balance at the monthly equivalent of your annual return, (1 + R)^(1/12) - 1.
- Classify the exit (normal, premature or after 60) and apply the PFRDA minimum annuity.
- Split the corpus into the lump sum and the annuity purchase.
- Show the tax-free part of the lump sum (60% of the corpus).
- Estimate monthly pension using the annuity return assumption.
Core assumptions
- Contribution amount and return assumptions stay constant.
- The expected return is an annual CAGR, as NPS reports scheme returns.
- Assumes you open NPS at your current age; an existing NPS balance is not included.
- Your annuity share is raised to the PFRDA minimum for the exit (20%, 40% for Government, 80% for a premature exit) unless the corpus is small enough to withdraw in full.
- Corporate and Government subscribers leave at superannuation unless you choose Leaving early; a retirement age of 58 or more counts as superannuation by default.
- Annuity return represents expected pension yield.
Not included
- Tax on the taxable part of the lump sum and on pension income is not calculated; SLW/SUR options, charges and annuity terms are not modelled.
- Asset allocation changes and actual market-linked NPS returns can change the result.
About NPS (National Pension System) Calculator
Guide1What is NPS (National Pension System)?
The National Pension System (NPS) is a voluntary, defined-contribution retirement savings scheme regulated by PFRDA (Pension Fund Regulatory and Development Authority). It is designed to provide retirement income to all Indian citizens, including both salaried and self-employed individuals.
NPS invests your contributions in a mix of equity, corporate bonds, government securities, and alternative assets based on your chosen allocation. It offers market-linked returns with the potential for higher long-term growth compared to traditional fixed-return schemes.
2NPS Account Types and Tax Benefits
- Tier I (Mandatory): Primary retirement account with restricted withdrawals; contributions qualify for tax deductions
- Tier II (Voluntary): Savings account with no withdrawal restrictions; no additional tax benefits (except for government employees)
- Section 80CCD(1): Your own contribution, up to 10% of salary, within the ₹1.5 lakh Section 80C limit (old regime)
- Section 80CCD(1B): An extra ₹50,000 for your own contribution, old regime only. It is not available in the new (default) regime.
- Section 80CCD(2): Your employer's contribution is deductible up to 14% of salary in the new regime, for every employer. In the old regime the limit is 14% for government and 10% for other employers. Employer contributions to EPF, NPS and superannuation above ₹7.5 lakh a year in total are taxed as a perquisite.
From tax year 2026-27 these deductions sit in sections 123–124 of the Income-tax Act, 2025.
3NPS Asset Allocation
NPS allows you to choose between Active Choice (you select the allocation) and Auto Choice (age-based allocation):
- Equity (E): Invests in equity markets — higher growth potential, higher risk
- Corporate Bonds (C): Fixed income from corporate debt instruments
- Government Securities (G): Safest option with government-backed returns
- Alternative Assets (A): REITs, InvITs, and other alternative investments (max 5%)
In the common schemes, Active Choice caps equity at 75%, reducing after age 50. Since 1 October 2025 the Multiple Scheme Framework lets non-government subscribers choose schemes with up to 100% equity.
4How to Use This NPS Calculator
- Step 1: Enter your monthly NPS contribution
- Step 2: Set your current age and expected retirement age
- Step 3: Choose the expected annual return (CAGR) and your subscriber type. For Corporate and Government, say whether you leave at superannuation or earlier
- Step 4: Set the annuity share and rate, then review the lump sum (tax-free and taxable), annuity amount and monthly pension
5NPS Withdrawal Rules at Retirement
PFRDA's exit regulations, as amended on 16 December 2025, set the minimum annuity by sector, exit type and corpus. The calculator applies the minimum for your exit.
- Normal exit (All Citizen): After 15 years in NPS or at age 60, whichever comes first. At least 20% buys an annuity; up to 80% can be taken as a lump sum
- Normal exit (Corporate): At superannuation, with the same 20% minimum annuity
- Government-sector normal exit: At least 40% annuity; up to 60% lump sum
- Premature exit: Leaving earlier (before superannuation for Corporate and Government subscribers) needs at least 80% in an annuity; up to 20% lump sum
- Joined at 60 or later (All Citizen): No minimum holding period; at least 20% annuity
- Small corpus: A corpus up to ₹8 lakh (₹5 lakh for a premature exit, ₹12 lakh if you joined at 60 or later) can be withdrawn in full
- Corpus of ₹8–12 lakh at a normal exit: You can instead take up to ₹6 lakh as a lump sum and the rest as systematic withdrawals over at least 6 years
- Tax: 60% of the corpus is tax-free. The rest of the lump sum is taxed at your slab rate, and annuity income is taxable
Check the current PFRDA rules for your sector and exit circumstances before acting.