NPS Calculator
Assumptions: Annuity 20% of corpus (PFRDA minimum) · Annuity return 6% p.a. · Returns not guaranteed.
Frequently Asked Questions
How does this NPS calculator estimate my retirement corpus?
The calculator projects your NPS Tier 1 corpus using a month-by-month compounding model. Each month your contribution (increased annually by the step-up %) is added and earns the selected return rate. At retirement age, it computes the total corpus, the lump-sum withdrawal (80% — PFRDA minimum for annuity purchase is 40%, but this calculator uses the conservative 80/20 split), and the estimated monthly pension from the annuity portion at a 6% annuity rate.
What is the difference between NPS Tier 1 and Tier 2 accounts?
Tier 1 is the mandatory pension account — contributions are locked until age 60 (with limited partial withdrawal exceptions) and qualify for Section 80CCD tax deductions up to ₹2 lakh per year. Tier 2 is a voluntary savings account with no lock-in, no additional tax benefit, and full liquidity. This calculator models Tier 1, which is the primary retirement vehicle under NPS.
How much of the NPS maturity corpus is tax-free?
At retirement (age 60+), 60% of the NPS corpus can be withdrawn as a lump sum — this is completely tax-free. The remaining 40% must be used to purchase a life annuity from a PFRDA-empanelled insurer; annuity income is taxable as per your income slab. Partial withdrawals before 60 (for specific purposes like housing or education) are also tax-free up to 25% of own contributions.
What annual return rate should I use for NPS projections?
NPS returns depend on your asset allocation (Equity/Corporate Bond/Government Bond). Historically: Active Choice with 75% equity has delivered 10–12% CAGR over 10+ years; balanced allocation (50% equity) has returned 9–11%; conservative (mostly bonds) returns 7–9%. For long-horizon planning (20+ years), 10–11% is a reasonable equity-heavy assumption; use 8–9% for a conservative estimate.
NPS vs PPF — which is better for retirement in India?
NPS typically builds a larger corpus over long horizons due to equity exposure (historically 10–12% vs PPF's fixed 7.1%), but only 60% is fully tax-free at maturity and the annuity income is taxable. PPF has EEE status (fully tax-free at all stages) with government-guaranteed returns and zero market risk. For a retirement plan: NPS suits investors comfortable with market risk and seeking higher growth; PPF suits conservative investors prioritising guaranteed, fully tax-free returns. Most advisors recommend using both.
Can I model step-up contributions in this NPS calculator?
Yes. The 'Annual Step-up (%)' input lets you increase your monthly contribution by a fixed percentage each year — for example, 5% step-up means your contribution grows by 5% every April. Step-up contributions significantly boost the final corpus because the increased amounts also compound over the remaining tenure. Set step-up to 0 if you want to model a fixed monthly contribution throughout.
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Disclaimer: Returns are not guaranteed or assured. The calculator's accuracy is not warranted. Before making any investment decisions, please seek advice from your financial advisors.
