NPS Returns

An investment plan where a small part of the current income is invested and accumulated for old age needs is a helpful source of income. The National Pension Scheme (NPS) is one such investment plan. In addition to encouraging a disciplined approach to saving, NPS returns help create a corpus that will allow financial security in old age. Before we explore how NPS returns function in greater detail, let’s briefly understand its meaning.

Read more
  • Peaceful Post-Retirement Life

  • Tax Free Regular Income

  • Wealth Generation to beat Inflation

We are rated~
rating
6.7 Crore
Registered Consumers
51
Insurance Partners
3.4 Crore
Policies Sold

Invest ₹6,000/month & Get Tax Free Monthly Pension of ₹60,000

Get the best returns & make the most of your Golden years

+91
Secure
We don’t spam
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company
Get Updates on WhatsApp
We are rated~
rating
6.7 Crore
Registered Consumers
51
Insurance Partners
3.4 Crore
Policies Sold
Pension Funds
Pension Funds Most Popular
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
11,839 Cr
Returns
21.83%
Returns
23.81%
Highest Return
Returns
19.95%
Get Details
6,136 Cr
Returns
26.84%
Returns
27.87%
Highest Return
Returns
18.81%
Get Details
4,172 Cr
Returns
21.74%
Highest Return
Returns
20%
Returns
17.43%
Get Details
36,694 Cr
Returns
19.19%
Returns
19.75%
Highest Return
Returns
16%
Get Details
6,189 Cr
Returns
20.54%
Highest Return
Returns
19.61%
Returns
15.8%
Get Details
13,189 Cr
Returns
16.56%
Returns
16.97%
Highest Return
Returns
14.51%
Get Details
3,062 Cr
Returns
17.13%
Highest Return
Returns
16.15%
Returns
13.6%
Get Details

What is NPS?

The National Pension Scheme is a voluntary retirement scheme managed and controlled by the PFRDA under the Finance Ministry. This pension scheme aims to ensure retirement security for all citizens in the country. An individual invests a certain amount as per their will into funds or assets of their choice and then earns NPS returns on those investments. 

With the combination of comfort, convenience, flexibility, portability, and taxation benefits in one scheme, it is one of the ideal financial tools for post-retirement security in the market. 

How Do NPS Returns Work?

Those who invest in the National Pension Scheme not only create savings but also earn returns for a better future. But how do individuals earn NPS returns on such investments?

To invest in a National Pension Scheme, you must open a Tier I NPS account and comply with KYC (Know Your Customer) requirements.

NPS has four asset classes: 

  • Equity

  • Corporate bond

  • Government security

  • Alternative assets

Individuals have the option of splitting their money between these assets according to their wishes. However, a person may leave the decision to the pension fund managers if they do not wish to exercise this option themselves. 

The pension fund managers, selected for their expertise and credibility, will allocate investments according to investors’ risk profiles. It is important to remember that these investments cannot be made in small-cap or foreign companies. 

Currently, eight pension fund managers are approved by the government. While the government selects the fund managers for government employees (state or central), all individuals can choose their preferred pension fund manager. 

The NPS returns depend entirely on the selected asset classes and pension fund managers. No interest rate is attached to the NPS returns. The growth of the respective assets along with the pension fund management over time dictates the overall returns on the scheme. Therefore, we can also say that NPS returns are market-linked returns.

People Also Read: Best Retirement Plan

What Are the Tax Rules for NPS Returns?

Like all investments, taxation rules need to be considered before investing in the National Pension Scheme. The NPS returns are taxed according to the withdrawal rules of Tier I and Tier II NPS accounts. 

Following are the withdrawal rules of both of the accounts: 

  • Tier I NPS account rules stipulate that an individual cannot withdraw money from the retirement account until they turn 60. Funds accumulated in the account are not taxable. 

  • However, if a person withdraws 25% of the corpus for purchasing a home, treating critical medical issues, or investing in children’s education, then he/she is permitted to withdraw the funds even before he/she is 60 years of age and they will not be taxed. The remaining balance will be used for purchasing annuities and will be subject to tax. 

  • A person can only withdraw 60% of the total corpus of an NPS retirement account if they want to receive tax-free returns after 60 years of age. The remaining 40% is invested in annuities to earn NPS returns to provide regular monthly pensions for the individual’s lifetime. The income earned from NPS returns from this annuity will be taxable.

  • If individuals need to withdraw money for a different purpose not mentioned above, there are two conditions:

    • NPS schemes should be active for a minimum of three years.

    • A maximum of 20% of the corpus amount may be withdrawn, and this amount will be taxed at the individual tax slab rate. The remaining 80% of the annuity will also be taxed at the slab rate.

  • Although Tier II NPS accounts allow flexible withdrawals without age restrictions, except government employees, they don’t offer any tax benefits. The government employees can’t withdraw funds before a period of three years. 

How to Use NPS Calculator Online for Returns?

A person must fall between the age of 18 to 60 years to enroll and receive benefits of the scheme. An NPS calculator gives an overview of the amount the investor will accumulate at maturity, interest earned, and the monthly pension. Additionally, the calculator displays the amount withdrawn and the amount to be reinvested. 

The investor must enter the following information into the calculator:

  • Age - current and expected retirement date

  • Monthly investment

  • Desired NPS returns on investment

  • Investment duration

  • Rate of interest on the principal amount

  • Percentage of investment in annuity plan (minimum 40%)

In Conclusion

Today, you can use online NPS returns calculators to estimate how much you may earn from a given NPS scheme. If you have any doubts, you can also speak to a financial advisor and understand the suitable NPS scheme for you. You must always do your research before making any investment.

FAQ's

  • Q1: Are NPS returns guaranteed and fixed?

    NPS returns vary with scheme performance. In other words, they are linked to the market. Thus, they do not guarantee a fixed return.
  • Q2: What happens to investors’ NPS returns after they die?

    The NPS offers a nomination facility, and in case of the unfortunate demise of the account holder, the accumulated pension is paid to the nominee. Additionally, the nominees do not need to purchase the minimum annuity as well.
  • Q3: Are NPS investments a good idea?

    In the last 12 years, the NPS returns have generated more than 12% returns, according to the PFRDA chairman. Over 12% was recorded by the equity sector and around 9.9% and 9.59% by the government and corporate bonds.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

Secure Your Retirement Today
Start Investing ₹6,000/month
Get Pension ₹60,000/month+
Including Life Cover
View Plan
Pension Plans
+Standard T&C Applied
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Secure your Retirement today!
START INVESTING
₹6,000/month
GET PENSION
₹60,000/month+
Heart
INCLUDING LIFE COVER
+ Standard T & C Apply*
Pension Calculator
Pension Calculator
How much do you need to save for retirement?
₹ 20,000
₹ 25,000
₹ 30,000
Monthly Expenses in 2024
Edit Done
Your expense go up every year by
Today 2024 Your expenses today in 2023, at the age of 34 Yrs
Your expenses in 2043, at the age of 55 Yrs
For a monthly pension of ₹77,300
you need to invest
₹14,300/month
Calculated as per past performance of 15%
View Plan Recalculate?

Pension plans articles

Recent Articles
Popular Articles
e-Pension

20 Jun 2024

e-Pension refers to an electronic pension management system
Read more
Tata Pension Plan Calculator

19 Jun 2024

As you approach retirement, it is crucial to have a clear
Read more
Social Security Pension Scheme

19 Jun 2024

The Social Security Pension Scheme in India is a government
Read more
How Can I Get a 3000 Pension?

01 May 2024

Securing a monthly pension of 3000 rupees is a goal that many
Read more
Pension Calculator

13 Feb 2024

Pension calculator helps you calculate the amount you could
Read more
SBI Annuity Deposit Scheme Calculator 2024
SBI Annuity Deposit Scheme Calculator 2024 is an online tool that helps you figure out your fixed annuity
Read more
Top 15 Pension Plans in India
The Pension Plan, also known as a Retirement Plan is the best investment instrument allowing individuals to build
Read more
Sevarth Mahakosh
Sevarth Mahakosh Portal is a one-stop solution for all state government employees' financial transactions and
Read more
NPS Calculator 2024
NPS Pension Calculator is a financial tool that calculates potential returns on the National Pension Scheme, by
Read more
NPS Calculator for Government Employees
National Pension Scheme or National Pension System (NPS) is launched by the Government of India for all its
Read more

top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL