National Pension Scheme Annuity Calculator

Under NPS, when you retire, you can withdraw up to 60% of your total savings as a lump sum. The remaining 40% is used to buy an annuity that gives you regular income after retirement.

By using the calculator, you can get a clear idea of your future pension amount, making it easier to plan your retirement finances.

NPS Calculator

Your Age

Years

18 Years 59 Years

Enter Your Age

Monthly Investment

₹

₹500 ₹10L

Enter Investment Per Month

Expected Return on Investment

%

5% 15%

Expected Return on Investment

Percentage of Corpus Allocated for Pension

%

40% 100%

Enter Corpus Percentage

Expected Return from Pension

%

5% 15%

Enter Annuity Return

₹0

Your Monthly Pension

View Plans

₹0

Your Monthly Pension

View Plans Your Pension Calculation

Your Pension Calculation

Total Investment

Returns Earned

Maturity Amount

Maturity Amount split (Lumpsum & Pension)

60%

Lumpsum Amount

At the age of 60 Yrs

40%

Pension Wealth

At the age of 60 Yrs

View Plans

Need for National Pension Scheme Annuity Calculator

• The NPS Annuity Calculator helps you estimate the monthly pension you can receive after retirement if you invest in the NPS.
• It gives a tentative maturity value you can expect when your NPS account matures.
• This helps you plan important life goals, such as:
  • Buying a house after retirement
  • Going on a vacation
  • Managing regular monthly expenses
• While the results are not exact, they are very close to the real amount you will receive.
• Using the calculator makes it easier to plan your retirement and stay financially secure in your later years.

How to Use the NPS Annuity Calculator?

Anyone planning to invest in the National Pension Scheme (NPS) can use the NPS Annuity Calculator to estimate their future pension. Just follow these easy steps:

Step-by-Step Process:

Step 1: Visit the Official Website: Go to the National Pension Scheme Trust site and search for the calculator tool.

Step 2: Enter Basic Details: Input your birthdate, monthly investment, and investment duration.

Step 3: Adjust the Return on Investment (ROI): Adjust the expected Rate of Return (ROI) using the slider.

Step 4: Choose the Annuity Purchase Percentage: select what portion you want to convert into a monthly pension.

Step 5: Select Expected Annuity Interest Rate: Input the expected annuity interest rate after retirement.

Step 6: View Your Results: The calculator displays:

• Lump sum at maturity
• Monthly pension
• Total amount invested

Using the calculator helps you plan your retirement by giving a clear picture of your expected savings and pension income.

Benefits of NPS Annuity Calculator

Here is a rundown of the core benefits of the National Pension Annuity Calculator:

• The National Pension Annuity Calculator is available online.
• You can access it anytime, right from the comfort of your home, based on your convenience.
• It provides quick results within seconds and can be used multiple times to help you make informed decisions.
• It is completely free of charge for you to use.
• This tool supports a greater sense of financial autonomy and helps you plan more confidently for your retirement.

Illustration of Investment in NPS

Let’s understand how the National Pension Scheme (NPS) works using a real-life example and simple step-by-step calculations.

Assume that a 24-year-old female working professional decides to contribute Rs. 2000 from her salary every month towards the NPS. The return on investment expected is 9%. The percentage of an annuity she expects to purchase is 50%, and the rate of return on the annuity is 7%

Scenario:

• Age: 24 years
• Monthly Contribution: ₹2,000
• Expected Annual Return on Investment (ROI): 9%
• Retirement Age: 60 years
• Investment Period: 36 years (60 - 24)
• Annuity Purchase at Retirement: 50%
• Expected Annual Return on Annuity: 7%

Step 1: Total Investment Over the Years

Formula: Total Investment = Monthly Contribution × 12 × Number of Years

Calculation: ₹2,000 × 12 × 36 = ₹8,64,000
So, she will invest a total of ₹8.64 lakhs by the time she retires.

Step 2: Total Corpus at Retirement

We use the Future Value (FV) formula for a recurring investment (monthly contribution):

Plugging in values: FV = 2,000 × ((1+0.0075)432–1)/0.0075((1 + 0.0075)^432 – 1) / 0.0075((1+0.0075)432–1)/0.0075 × (1 + 0.0075)

 After calculating:
FV ≈ ₹88,65,000 (Approximate corpus at age 60)

Step 3: Lump Sum Withdrawal at Retirement (60%)

60% of ₹88.65 lakhs = ₹53.19 lakhs
This amount can be withdrawn as a lump sum, tax-free.

Step 4: Amount Used to Buy Annuity (40%)

Remaining 40% = ₹35.46 lakhs
This is used to buy a monthly pension (annuity).

Step 5: Monthly Pension from Annuity

Now, use the simple annuity formula to estimate the pension:

Formula: Monthly Pension = (Annuity Corpus × Interest Rate) / 12

Calculation: (₹35,46,000 × 7%) / 12 = ₹2,07,600 ÷ 12 = ₹17,300/month (approx.)

Final Summary:

This example shows how small, consistent contributions can create a significant retirement corpus and a stable pension.

Information Required for the Calculator

To get an estimate of your retirement amount using the NPS Annuity Calculator, you’ll need to provide a few basic details. Here's what you'll need:

• Your Date of Birth – To calculate how many years you’ll invest before retirement
• Monthly Investment Amount – How much you plan to contribute every month
• Investment Duration – The number of years you want to stay invested (usually till age 60)
• Expected Rate of Return – The interest rate you expect your investment to grow at (e.g., 8% or 9%)
• Annuity Purchase Percentage – The portion of your retirement corpus you want to convert into a monthly pension (e.g., 40%, 50%)
• Expected Annuity Return Rate – The interest rate you expect to earn on the annuity after retirement

These inputs help the calculator give you a close estimate of your lump sum amount and monthly pension plan after retirement.

Who Can Open an NPS Account?

The National Pension Scheme (NPS) is open to a wide range of individuals across sectors. The following individuals can open the NPS account:

• All Citizens of India:
  • Open to Indian citizens (including NRIs and OCIs) aged 18–70.
  • Must complete KYC and apply online or through a registered NPS provider.
  • Note: HUFs and PIOs are not eligible.
• Central Government Employees & CABs:
  • Mandatory for those who joined on or after Jan 1, 2004 (excluding armed forces).
  • Pre-2004 joiners can opt in with the Ministry of Finance approval.
• State Government Employees & SABs:
  • Eligible if the respective State/UT has adopted NPS.
• Corporate Employees (Corporate Model):
  • Open to employees aged 18–70 in companies where the employer has enrolled under NPS.
  • Applicable to private firms, PSUs, LLPs, trusts, co-ops, and diplomatic missions.
  • Employers can join via PFRDA registration or as a Corporate Head Office (CHO)

NPS Tax Benefits 

The National Pension Scheme (NPS) is a reliable tool for retirement planning and offers several tax-saving opportunities under the Income Tax Act. These benefits are distributed across three key sections: 80CCD(1), 80CCD(1B), and 80CCD(2).

Let’s explore each with a practical example.

1. Section 80CCD(1): Deduction on Individual Contributions

   • Who qualifies: Salaried employees investing in NPS from their own income.
   • Tax Deduction: Up to 10% of Basic Salary + Dearness Allowance (DA), up to 20% for salaried employees.
   • Cap: This falls under the overall ₹1.5 lakh limit defined in Section 80CCD(1) (which also includes ELSS, PPF, etc.).

   Example:

   • Aarav earns ₹6,60,000 per year as Basic Salary + DA.
   • 10% of ₹6,60,000 = ₹66,000.
   • So, Aarav can claim ₹66,000 as a deduction under Section 80CCD(1).
   • However, since this is part of the larger ₹1.5 lakh limit under Section 80CCD(1), any other investments (e.g., LIC premiums or mutual funds under ELSS) also count towards this limit.

   Tip: Plan your investment portfolio to ensure your NPS contribution helps you maximize this deduction.

2. Section 80CCD(1B): Extra Deduction for NPS Investors

   • Who can claim: Any individual who contributes to NPS, regardless of employment type.
   • Tax Deduction: An additional ₹50,000, separate from the ₹1.5 lakh cap of Section 80CCD(1).

   Example:

   • Aarav has already utilized the full ₹1.5 lakh deduction limit through other investments like PPF and term insurance.
   • He decides to invest an extra ₹50,000 in NPS.
   • This full amount is deductible under Section 80CCD(1B), allowing Aarav to reduce his taxable income further.

   Total so far: ₹66,000 (from 80CCD(1)) + ₹50,000 (from 80CCD(1B)) = ₹1,16,000 in deductions.

3. Section 80CCD(2): Deduction on Employer’s Contribution

   Who can avail: Salaried individuals whose employer contributes to their NPS account.

   Tax Deduction:

   • Up to 10% of Basic + DA for most employees, under the old tax regime.
   • For employees, the limit is higher, up to 14% under the new regime.

   Important: This deduction is over and above the ₹1.5 lakh and ₹50,000 limits.

   Example:

   • Aarav’s Basic + DA amounts to ₹11,00,000 annually.
   • His employer contributes 10%, which is ₹1,10,000.
   • This ₹1,10,000 is fully deductible under Section 80CCD(2).
   • If Aarav's employer could contribute up to 14% under the new tax regime, equaling ₹1,54,000. The entire amount would still be tax-exempt under this section.

Conclusion

The National Pension Scheme Annuity Calculator is a powerful tool to plan your retirement with clarity and confidence. Whether you're a salaried professional or self-employed, using this calculator helps in retirement planning more effectively.