NPS Calculator (National Pension Scheme)

National Pension Scheme is an online tool, which allows the individual to calculate the estimated lump-sum and pension amount that they will receive under the NPS scheme.

What is NPS Calculator? 

As the name suggests, the NPS calculator estimates how much you will receive as a pension when you retire at age 60. This gives you an idea about how much to invest monthly, starting now, to receive a suitable corpus on retirement!

The amount of corpus accumulated by the time of retirement depends on your investment amount and returns generated. A pension scheme gives you a fixed uniform income, for a set number of years after you retire.

You pay a certain amount of premium every month into the pension fund. It earns an annual compound interest, which adds to your fund value.

The annuity scheme of the pension plans is offered with the following investment instruments:

• Life insurance policies
• PPF/ EPF
• Mutual funds or the National Pension Scheme (NPS).

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

How to use NPS Calculator?

The following is the step by step guide to using NPS calculator:

Firstly, you will need to enter the important details.

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

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

Expected Return on Investment (ROI)- Select the return om investment which you desire to get.

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 NPS scheme, the annuity refers to the amount the subscriber will receive per month after retirement from the Annuity Service Provider (ASP)

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%.

Expected Annuity Rate- Lastly you will need to enter the expected rate of annuity i.e. the amount of annuity that you want to receive from your pension.

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.

Check Also: Annuity Calculator

How does NPS Pension Calculator work?

The NPS 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, the NPS calculator also computes the expected monthly pension that you will receive on the basis of the expected returns on the annuity.

The online NPS calculator also computes the amount of total interest earned over the years.

You just need to feed in:

• Your current age
• Your retirement age
• The amount you are investing monthly
• Estimated Annuity interest rate, which is currently at 8%.

Let us assume, MALINI, who is currently 36 and is expected to retire at 60, is investing Rs.10,000 per month in the NPS scheme. The expected Annuity rate of interest for her NPS fund is 8%.

The NPS Calculator would give her the following result:

Benefits of NPS pension Calculator

NPS pension calculator is a specifically designed tool to calculate the estimated pension that you will receive at the time of retirement. The following are the benefits of the 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, the NPS calculator also helps you to do financial planning more efficiently.
• With the help of the NPS calculator, you can know the estimated amount you will receive as a pension after retirement.

Features of National Pension Scheme (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.

The formula for calculating Pension Amounts

Similar to all pension scheme, NPS also use 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 see an example to understand how the pension is calculated.

Let’s assume that you are 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 shown by the National Pension Scheme Calculator.

Total Principal Invested = Rs 6. 24 lakh 

Lump-sum amount expected at maturity = returns+ principal= Rs. 29.81lakh

Expected Monthly Pension= Rs. 7534

Who can use the NPS Return calculator?

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

 NPS (National Pension Scheme) Calculator – FAQs

Q1. How much can I invest in NPS?

Ans- Fir tier I account, the subscribers can make a yearly contribution of Rs.6000 and Rs.500 as a one-time contribution. For the tier-II account, the subscribers can make a yearly contribution of Rs.2000 and Rs.250 as a one-time contribution.

Q2.  What is the pension amount in NPS?

Ans- The amount of sum received by the individual as an annuity based on the contribution made towards the scheme is known as the pension amount in NPS.

Q3.  Is it good to invest in NPS?

Ans- As NPS is a government-sponsored pension scheme, NPS is a safe and lucrative investment option for individuals who want to secure the financial future after retirement by accumulating wealth in the long term.

Q4.  Can I do SIP in NPS?

Ans- NSP, and SIP are two different types of investment option, so one cannot do SIP in NSP

Q5. Can I have two NPS account?

Ans- No, one cannot open more than one NSP account or hold multiple NSP account.

What is the current interest rate of NPS?

Ans- The current interest rate of National Pension Scheme is 9%-12%

Q6. Is NPS risk-free?

Ans- As a government-sponsored pension scheme, it is quite popular among the investors who are looking for a risk-free retirement option.

Q7: What are the tax benefits under NPS?

Ans- The contribution made towards the NPS scheme up to the maximum limit of Rs.1.5 lakh is eligible for tax exemption U/S80C of Income Tax Act. Moreover, in the national pension scheme, the contribution made by the employee and employer both are applicable for tax exemption.