NPS Calculator
Plan your National Pension Scheme returns.
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The pension nobody talks about at 25
Ask a fresh graduate in Bengaluru about retirement and you'll get a shrug. That's normal. Retirement feels like a problem for some other, older version of you. But the National Pension System rewards people who start ignoring that shrug early, because every rupee you put in at 28 has thirty-odd years to compound before you turn 60.
Here's the basic shape of it. You contribute regularly into your NPS account, the money gets invested across equity and debt depending on the mix you pick, and it grows. You keep going until 60. So far it behaves a lot like any market-linked investment.
What happens when you hit 60
This is where NPS gets its own personality. At 60 you can take out up to 60 percent of your built-up corpus as a lump sum, and that chunk is tax-free. The remaining 40 percent, at minimum, has to go into buying an annuity. That annuity is what pays you a monthly pension for the rest of your life. You don't get the full pile in cash, and that's by design. The scheme wants you to have steady income, not a one-time windfall you might burn through.
Many people split it differently. Some take less lump sum and put more into the annuity for a fatter monthly cheque. Your call.
A worked example
Say Priya, a 30-year-old in Pune, puts in 5,000 every month. Assume the corpus grows at around 10 percent a year over 30 years. By 60 she'd have contributed 18,00,000 of her own money. The projected corpus lands somewhere near 1.13 crore. Of that, she could pull out roughly 68 lakh tax-free and route about 45 lakh into an annuity for her monthly pension. The exact pension depends on annuity rates at that time, so check the current rules before banking on a number.
Notice the gap. She put in 18 lakh and ended near 1.13 crore. That's compounding plus three decades of patience.
The tax sweetener
There's a reason accountants nudge clients toward NPS. Beyond the usual deductions, you get an extra deduction of up to 50,000 a year under Section 80CCD(1B). And it sits on top of your 80C limit, not inside it. So if you've already maxed out 80C with your PF, insurance, and ELSS, this is a separate slice you can still claim. Small print changes, though, and tax rules get tweaked, so confirm the current limits when you file.
NPS isn't flashy. But for a long runway, it does quiet, useful work.
NPS Calculator — frequently asked questions
Is the NPS lump sum at 60 really tax-free?
Yes, currently the lump sum you withdraw at 60 is exempt from tax, up to the 60 percent of corpus that the rules allow you to take out. The remaining portion goes into an annuity, and the pension you draw from that annuity is taxed as income in the year you receive it. Tax rules shift now and then, so check the current rules before you plan your exit.
How much can I save in tax through NPS?
NPS gives you an extra deduction of up to 50,000 a year under Section 80CCD(1B). The key point is that it sits over and above your usual 80C limit, so it does not eat into the room you use for PF, insurance, or ELSS. Your actual saving depends on your tax slab. Someone in a higher slab gets more rupee benefit from the same deduction.
Can I withdraw money from NPS before 60?
Early exit is allowed but the terms are stricter. If you leave before 60, a larger share usually has to go into an annuity and only a smaller part comes as cash, unless the corpus is very small. There are also partial withdrawal options for specific needs like a child's education, a wedding, or a serious illness, with limits and conditions. Always check the current rules first.
What return should I expect from NPS?
NPS is market-linked, so returns are not fixed. The equity portion follows the stock market and the debt portion tracks bonds. Over long periods many investors have seen returns in the range of around 9 to 11 percent a year, but past numbers do not guarantee future ones. Your blend of equity and debt, and how long you stay invested, both move the needle a lot.
Why must I buy an annuity with part of my NPS corpus?
The scheme is built to give you steady income through retirement, not a single payout. So at least 40 percent of the corpus has to buy an annuity that pays a monthly pension for life. This protects you from spending the whole amount too fast. You can choose to put more than 40 percent into the annuity if you want a bigger monthly pension and a smaller lump sum.
Is NPS better than mutual funds for retirement?
They serve slightly different jobs. NPS locks your money till 60 and gives an extra tax deduction, which suits disciplined long-term saving. Mutual funds are far more flexible, you can sell anytime, but they offer no special NPS-style deduction. Many people use both, NPS for the tax break and forced discipline, funds for liquidity. There is no single right answer, it depends on your goals and how much access you need.
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Results from this calculator are estimates for informational use only — not financial, medical, or professional advice. Read our full disclaimer before acting on any number you see here.