NPS Calculator

What is NPS Calculator?  – An Overview

The National Pension Scheme Calculator helps an investor to get an estimate of the wealth gained, maturity amount of the whole investment i.e., how much they will receive as a pension when they retire at age 60 and monthly pension. This gives you an idea about how much to invest monthly to receive a suitable corpus on retirement. The amount of corpus collected by the time of retirement depends on your investment amount and returns generated. 

Simply put, the more the money invested, the more the accumulated sum, and the larger would be the final benefit of the accumulated pension wealth.  With an option to select between debt and equity, the NPS calculator lets you check the expected retirement corpus based on your risk appetite. Thus, NPS calculator is a convenient tool to make an informed NPS investment. 

Who can use the NPS Calculator?

All individuals can use the NPS calculator who are eligible to invest in the National Pension Scheme. 

Eligibility Criteria: As per the NPS rule, all Indian citizens between the age group of 18-60 years are eligible to invest in the pension scheme. Also, the applicant will require to fulfill the Know Your Customer (KYC) guidelines in order to invest in NPS.

Features of NPS Calculator

Here are some of the salient features of the National Pension Scheme Calculator.

• This calculator can be used online in a very easy and simple way.

• The calculator helps to calculate the exact amount that you will receive a pension.

• The calculator also shows the amount invested by you during the accumulation phase, interest earned, and the total amount of funds generated at maturity.

• All individuals who are eligible to invest in the National Pension Scheme can use the National Pension calculator.

How to Use NPS Calculator?

Following is the step by step guide to use the NPS pension calculator:

You are required to enter the below details systematically. 

Step 1: Date of Birth (DOB)- Based on your DOB, the NPS Pension calculator will compute the number of years you will need to contribute to the scheme in order to accumulate the desired amount after retirement.

Step 2: Investment Amount- Enter the amount that you want to contribute per month.

Step 3: Expected Return on Investment (ROI)- Select the desired return on investment 

Step 4: Percentage of Annuity to be Purchased- This is the percentage of the amount i.e. the pension fund that you would like to reinvest to buy an annuity on maturity. In the NPS scheme, the annuity refers to the amount the investor will receive per month after retirement from the Annuity Service Provider (ASP)

Note: It is important to note that the percentage of accumulated funds reinvested to purchase an annuity cannot be less than 40%. However, in case of premature exit of scheme i.e. before 60 years of age, the minimum percentage of funds to be reinvested to purchase annuity should be 80%.

Step 5: Expected Annuity Rate- Enter the expected annuity rate i.e. the amount of annuity that you want to receive from your pension.

Step 6:  Once you enter all the details, the National Pension Scheme calculator will simultaneously calculate the estimated lump-sum amount and pension amount you will receive at the time of maturity.

Benefits of NPS Calculator

NPS pension calculator is a specifically designed online tool that calculates the estimated pension amount that you will receive at the time of retirement. Following are the benefits of the online NPS calculator.

• It saves time as you don’t need to do any manual calculation and receive the right result every time.

• You can have a clear knowledge of how much investment you need to make in order to achieve the desired pension amount. Moreover, it also helps you to do financial planning more efficiently.

• With the help of a calculator, you can know the estimated amount you will receive as a pension after retirement.

How does NPS Calculator Work?

The NPS Pension Scheme Calculator also shows the summary of the pension account at the time of retirement i.e. the total amount contributed by you during the accumulation phase and the amount generated on maturity. Moreover, it also computes the expected monthly pension that you will receive on the basis of the expected returns on the annuity.

NPS Online calculator helps compute the amount of total earned interest over the years and you are required to enter the following details while calculating NPS returns: 

• Current age 

• Retirement age 

• The amount you are investing monthly 

• Estimated annuity interest rate, currently at 8%

Here is an example that helps you understand how the NPS calculator calculates your monthly pension 

Ms. Malini is a 36-year-old is a government employee and is expected to retire at 60. She is investing Rs. 10,000 per month in the NPS scheme. The expected Annuity rate of interest for her NPS fund is 8%.

The status of Malini’s Pension account at the time of retirement as generated by the NPS calculator will be as follows: 

Formula for Calculating NPS Amounts 

Similar to all pension schemes, NPS calculator also uses compounding interest to compute returns. Let’s take a look at the national pension scheme calculator formula.

A=P (1+r/n)^nt

In this equation, the amount is denoted as A. The other variables are as follows.

Let’s understand the pension calculation with the help of an example: 

If you are of 34 years and you make a monthly contribution of Rs.3000 towards the NPS scheme. You will need to continue making the contribution towards the account for 26 years more. Assuming the rate of interest expected (ROI) every year is 10%. The following are the details offered by the National Pension Scheme Calculator.

Total Principal Invested = Rs 9. 36 Lakh 

Sum expected at the time of maturity = 44.35 Lakh

NPS (National Pension Scheme) Calculator – FAQs