NPS Calculator

National Pension Scheme Calculator 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.

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NPS Calculator

Your Age

18 Years 59 Years
Enter Your Age

Investment Per Month

₹500 ₹10L
Enter Investment Per Month

Expected Return on Investment

5% 20%
Expected Return on Investment
Total Investment
Interest Earned
Maturity Amount

Percentage of Corpus to be allocated for Purchase of Annuity

40% 100%
Enter Corpus Percentage

Expected returns from the Annuity

3% 10%
Enter Annuity Return
Lumpsum Amount
At age of 60 Yrs
Yearly Pension
For life time

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).

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 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.
  • Investment Amount- Enter the amount that you want to contribute per month.
  • Expected Return on Investment (ROI)- Select the return on 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 show calculations for calculate the estimated lump-sum amount and pension amount you will receive at the time of maturity.

Check Also: Annuity Calculator

Benefits of National Pension Scheme (NPS)

National Pension Scheme offers retirement benefits to all the organized as well as unorganized sectors. Regulated and administered by the Pension Fund Regulatory and Development Authority(PFRDA), it is a reliable government-backed plan.

Any individual aged between 18 years and 60 years can open the National Pension Scheme Account. An eNPS account can also be opened if you have Pan Card or Aadhar Card.

Let us have a look at some of the benefits under the National Pension Scheme

Liquidity

As National Pension Scheme allows individuals to make systematic investments, liquidity is never an issue. To enjoy liquidity benefits, the subscriber needs to have any of the below-mentioned accounts along with a unique Permanent Retirement Account Number (PRAN).

Tier-I Account

  • Functions as a pension account
  • Withdrawn are subject to specific restrictions
  • The account can be opened with a minimum deposit of 500 rupees

Tier-II Account

  • Functions as voluntary account
  • Offers liquidity of funds through investments and withdrawals
  • Account can be opened with a minimum deposit of 250 rupees
  • Tier-I account needs to be active to open a Tier-II account

Flexibility

To attain flexibility of their own choice, NPS holders can choose from the following options

Auto Choice

  • It is a default option available to subscribers
  • The asset is allocated automatically depending upon your age
  • You cannot decide the proportion of allocation under auto choice

Active Choice

  • Where you decide asset allocation in
    • Equity
    • Corporate Bonds
    • Government Securities
  • Different percentages can be allocated in different classes
  • A maximum of 75% can be allocated towards Equity
  • Subscribers can switch investment options as well as the fund manager

Tax Benefit

Income Tax Act 1961 Tax Benefits
U/S 80CCD (1) Under Tier-I investments, tax is deductible within the total ceiling of 1.5 lakh
U/S 80CCD 1(B) Allowed up to Rs.50,000 as deductions towards Tier-I contributions
U/S 80CCD (2) Under Tier-I investments is eligible for deduction up to 14% for central government contributions and up to 10% for the rest

Withdrawal Benefit

If withdrawn before 60

  • Only 20% of the accumulated corpus to be received
  • Rest 80% must compulsorily annuitized

If 60 years or older

  • 60% of accumulated corpus to be withdrawn
  • Rest 40% must be compulsorily annuitized

National Pension Scheme will always be paid in Indian Rupees

Deposit Benefit

Under National Pension Scheme,

  • Contribution can be made any time of the financial year
  • Amount deposit in account is flexible and can vary every year

Eligibility Criteria

We know the benefits of the National Pension Scheme. Now have a look at who can take benefit of this government-backed scheme.

  • Any India residing citizen can open the NPS account
  • The minimum age eligibility for opening the NPS account is 18 years whereas the maximum age limit is 65 years
  • The applicant should be KYC compliant

The applicant should not have any pre-existing NPS account

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:

Number of Invested Years 24
Amount Invested (sans interest) Rs.2,880,000
Interest Earned Rs.5,773,258.43
Total Amount Invested in NPS Rs.2,880,000 + Rs.5,773,258.43 = Rs.8,653,258.43
Annual Pension Rs.415,356.40
Monthly Pension Rs.34,613.03
Withdrawable Amount on Maturity Rs.3,461,303.37
You may also compare: Saral Pension Yojana

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.

How NPS Amount calculate - NPS Calculation Formula

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.

P Principal Sum
R Interest rate per annum
N/n Number of times interest compounds
T/t Total tenure

Let’s see an example to understand how the NPS calculator calculates the pension.

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.

Is NPS better than PPF?

To secure the financial future, it is important to create a retirement portfolio right from the very beginning. NPS and PPF are both long term savings option which provides income tax benefits. Let’s make a fair comparison of both the options, to understand which is a better option of investment.

Features NPS PPF
Investment Limit Minimum-Rs.1,000 per annum Maximum-No upper limit Minimum-Rs.500 per annum Maximum-Rs.1.5 lakh per annum
Investment Type Hybrid and equity funds 100% debt product
Tax Treatment Almost exempt, exempt, exempt format(EE). Annuity payouts are taxable Exempt, Exempt, Exempt (EEE)
Compulsory Annuity Purchase Up to 40% of the corpus at the regular exit. 80% of the corpus at the premature exit. Not applicable
Maturity Period At the time of superannuation or when an individual turns 60 years.   In PPF there is no age limit as such. The PPF matures is 15 years.
Tax Benefit Up to Rs.1.5 lakh under section 80C of the IT Act, Up to 10% of the salary. If self-employed up to 20% of the total income. An exclusive benefit of Rs.50,000 U/S 80CCD (1B) of the IT Act Up to Rs.1.5 lakh under section 80C of the IT Act.
Premature Exit Possible After completion of 5 years in specific circumstances.
Partial Withdrawals Limited withdrawals are applicable in case of an emergency. Allowed after completion of 7 years of the policy.
Can NRIs  Invest? Yes NRI cannot open a new account. Accounts open before becoming an NRI can continue till maturity.
Loan Facility No Yes
Returns Market Linked Guaranteed Return

Is there a minimum contribution required for the NPS?

Even though there is no minimum contribution requirement per annum. It is advised to contribute a minimum of Rs.1000 per annum to ensure a reasonable annuity after retirement.

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.
  • Q6. What is the current interest rate of NPS?

    Ans: The current interest rate of National Pension Scheme is 9%-12%
  • Q7. 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.
  • Q8. 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.
Written By: PolicyBazaar - Updated: 18 November 2021
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