NPS Calculator
Project your National Pension System corpus at age 60, then see how it splits into a tax-free lump sum and a monthly pension bought with the mandatory annuity portion.
Reviewed by the CalcCafe editorial team · Last updated 18 July 2026 · How we test our tools
Example
Contribute ₹5,000 a month from age 30 to 60 — that is n = 360 monthly instalments at a monthly rate of 10 ÷ 1200 ≈ 0.833%. The corpus at 60 works out to about ₹1,13,96,627 against a total investment of ₹18,00,000. Using 40% of the corpus (₹45,58,651) to buy an annuity at 6% leaves a tax-free lump sum of roughly ₹68,37,976 and a monthly pension of about ₹22,793.
How it works
With a monthly contribution p, monthly rate i = annual rate ÷ 1200 and n = (60 − current age) × 12 months, the corpus is the future value of an annuity-due: corpus = p × ((1+i)^n − 1) ÷ i × (1+i). If the rate is 0, the corpus is simply p × n. At exit, the annuity percentage you choose (minimum 40%) is set aside to buy a pension: annuity corpus = corpus × pct ÷ 100, and the estimated monthly pension = annuity corpus × annuity rate ÷ 1200. The rest — up to 60% of the corpus — is paid out as a lump sum, which is tax-free under current rules.
Good to know
The National Pension System is a voluntary, market-linked retirement scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA), open to Indian citizens aged 18–70. Money goes into a Tier I account — the locked pension account this calculator models — while an optional Tier II account works like an open-ended investment with free withdrawals but no exclusive tax benefits. Contributions are invested by licensed pension fund managers across equity (E), corporate debt (C) and government securities (G).
You can steer the asset mix yourself with Active Choice — equity capped at 75%, and tapering after age 50 under lifecycle rules — or pick Auto Choice, where the equity share automatically reduces as you age across Aggressive, Moderate and Conservative lifecycle funds. Because returns are market-linked rather than declared, the 10% default here is only an assumption; NPS equity schemes have historically returned more than government-bond schemes, with correspondingly higher swings.
NPS carries a tax break most other instruments lack: beyond the shared Section 80C limit of ₹1.5 lakh (via 80CCD(1)), an extra deduction of up to ₹50,000 per year is available exclusively for NPS under Section 80CCD(1B). Employer contributions up to 10% of basic + DA (14% for central government employees) are additionally deductible under 80CCD(2), making NPS one of the most tax-efficient ways to add to retirement savings.
At 60 you must use at least 40% of the corpus to purchase an annuity from an empanelled life insurer — that annuity provides the monthly pension and is taxed as regular income when received. The remaining amount, up to 60%, can be withdrawn as a lump sum entirely tax-free. If the total corpus is ₹5 lakh or less, the whole amount can be withdrawn. Annuity rates vary by insurer and plan type (with or without return of purchase price), so the 6% default is indicative — compare actual quotes at exit.
Frequently asked questions
Why must 40% of the corpus go into an annuity?
PFRDA exit rules require subscribers retiring at 60 to use at least 40% of the accumulated corpus to buy an annuity from an empanelled insurer, which converts that portion into a guaranteed monthly pension. The remaining amount, up to 60%, can be taken as a tax-free lump sum.
What return rate should I assume for NPS?
NPS returns are market-linked, not fixed. A blended portfolio of equity, corporate bonds and government securities has historically delivered high single-digit to low double-digit annualised returns depending on the mix and period — 9–11% is a common planning range for equity-heavy allocations, lower for conservative ones.
Is my data uploaded anywhere?
No — this calculator runs entirely in your browser. Your inputs never leave your device, and it works offline once the page has loaded.
Is this NPS calculator free?
Yes, completely free with no sign-up and no limits.
People also ask
What is the extra ₹50,000 NPS tax benefit?
Section 80CCD(1B) gives an additional deduction of up to ₹50,000 a year for your own NPS Tier I contributions, over and above the ₹1.5 lakh Section 80C ceiling. Employer contributions up to 10% of basic + DA qualify separately under Section 80CCD(2).
Is the NPS lump sum at 60 really tax-free?
Yes — under current rules the lump-sum withdrawal of up to 60% of the corpus at age 60 is exempt from income tax. The monthly annuity pension bought with the remaining corpus, however, is taxed as ordinary income in the year you receive it.
What is the difference between NPS Tier I and Tier II?
Tier I is the actual pension account: locked until 60 (with limited partial withdrawals) and eligible for tax deductions. Tier II is an optional add-on with no lock-in and free withdrawals, but it offers no exclusive tax benefit for most subscribers and requires an active Tier I account.
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Sources & references
These tools follow our methodology and provide educational estimates only — verify important figures with a qualified professional.