NPS Calculator — National Pension System
| Year | Age | Invested (₹) | Corpus Value (₹) |
|---|---|---|---|
| 1 | 31 | 60,000 | 63,351 |
| 2 | 32 | 1,20,000 | 1,33,337 |
| 3 | 33 | 1,80,000 | 2,10,650 |
| 4 | 34 | 2,40,000 | 2,96,059 |
| 5 | 35 | 3,00,000 | 3,90,412 |
| 6 | 36 | 3,60,000 | 4,94,645 |
| 7 | 37 | 4,20,000 | 6,09,792 |
| 8 | 38 | 4,80,000 | 7,36,996 |
| 9 | 39 | 5,40,000 | 8,77,521 |
| 10 | 40 | 6,00,000 | 10,32,760 |
| 11 | 41 | 6,60,000 | 12,04,255 |
| 12 | 42 | 7,20,000 | 13,93,708 |
| 13 | 43 | 7,80,000 | 16,02,998 |
| 14 | 44 | 8,40,000 | 18,34,205 |
| 15 | 45 | 9,00,000 | 20,89,621 |
| 16 | 46 | 9,60,000 | 23,71,783 |
| 17 | 47 | 10,20,000 | 26,83,492 |
| 18 | 48 | 10,80,000 | 30,27,840 |
| 19 | 49 | 11,40,000 | 34,08,245 |
| 20 | 50 | 12,00,000 | 38,28,485 |
| 21 | 51 | 12,60,000 | 42,92,728 |
| 22 | 52 | 13,20,000 | 48,05,584 |
| 23 | 53 | 13,80,000 | 53,72,143 |
| 24 | 54 | 14,40,000 | 59,98,028 |
| 25 | 55 | 15,00,000 | 66,89,452 |
| 26 | 56 | 15,60,000 | 74,53,276 |
| 27 | 57 | 16,20,000 | 82,97,083 |
| 28 | 58 | 16,80,000 | 92,29,247 |
| 29 | 59 | 17,40,000 | 1,02,59,022 |
| 30 | 60 | 18,00,000 | 1,13,96,627 |
Returns assumed constant for illustration. Actual NPS returns depend on fund choice (E/C/G/A) and market performance. Past performance is not a guarantee of future returns. Consult a PFRDA-registered Point of Presence (PoP) for personalized advice.
What is the National Pension System (NPS)?
NPS is a government-backed, market-linked retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Launched in 2004 for government employees and opened to all citizens in 2009, NPS allows you to build a retirement corpus by investing monthly contributions across equity, corporate bonds, government securities, and alternative assets.
At retirement (age 60), you receive 60% of the accumulated corpus as a tax-free lump sum. The remaining 40% must be used to purchase an annuity — a guaranteed monthly pension for life from an empanelled insurance company. This structure ensures you cannot outlive your retirement savings while also giving you a substantial tax-free payout at 60.
NPS is particularly compelling because it offers the 80CCD(1B) deduction of ₹50,000 — over and above the ₹1.5 lakh Section 80C ceiling. This makes it the only instrument in India with a dedicated extra deduction limit, effective only under the old tax regime.
NPS Asset Classes — How Your Money is Invested
NPS invests in four asset classes:
| Asset Class | Description | Historical Return (approx) |
|---|---|---|
| E — Equity | Index funds (Nifty 50 / Sensex) | 10–14% p.a. |
| C — Corporate Bonds | AA+ rated corporate bonds | 7–9% p.a. |
| G — Government Securities | Central/state government bonds | 6–8% p.a. |
| A — Alternative Assets | REITs, InvITs, AIFs (max 5%) | Variable |
Under Active Choice, you can allocate up to 75% to equity (E) — but the equity allocation is automatically reduced to 50% at age 50 and further phased down to 0% by age 60. Under Auto Choice (Lifecycle Fund), allocation shifts automatically based on your age — Aggressive, Moderate, or Conservative lifecycle.
NPS Exit and Annuity Options
At age 60, NPS mandates a minimum 40% annuity purchase. You choose an annuity service provider (ASP) — currently 14 insurance companies including LIC, SBI Life, HDFC Life — and select from annuity types:
| Annuity Type | Description |
|---|---|
| Annuity for Life | Pension until death, corpus not returned |
| Life with Return of Purchase Price | Pension for life; corpus returned to nominee on death |
| Joint Life | Pension continues to spouse after subscriber's death |
| Life with 5/10/15/20-year guaranteed | Pension guaranteed for the chosen period even if you die earlier |
Annuity rates vary by type and age. Return-of-corpus annuities pay 5–6% of corpus, while life-only annuities pay 6–7%. The monthly pension is taxable as salary income in the year received.
NPS vs PPF vs EPF — Comparison
| Feature | NPS | PPF | EPF |
|---|---|---|---|
| Return type | Market-linked | Fixed (7.1%) | Fixed (8.25%) |
| Lock-in | Till age 60 | 15 years | Till retirement/exit |
| Tax on maturity | 60% tax-free; 40% annuity taxable | Fully tax-free | Tax-free (if 5+ years service) |
| Extra deduction | ₹50,000 via 80CCD(1B) | Within 80C limit | Within 80C limit |
| Employer contribution | Yes (80CCD(2) — no limit) | No | Yes (3.67% EPF + 8.33% EPS) |
| Partial withdrawal | Yes (with conditions after 3 yr) | Yes (from year 7) | Yes (conditions apply) |
Frequently Asked Questions
What is NPS and who should invest in it?
NPS (National Pension System) is a voluntary, long-term retirement savings scheme regulated by PFRDA (Pension Fund Regulatory and Development Authority). It is available to all Indian citizens aged 18–70. NPS is best suited for: salaried individuals who want the additional ₹50,000 deduction under 80CCD(1B) beyond the 80C limit, self-employed individuals planning retirement, and central/state government employees (for whom NPS Tier I is mandatory). NPS is not ideal for those who may need funds before age 60 due to its lock-in.
What is the difference between NPS Tier I and Tier II?
Tier I is the primary pension account with lock-in until age 60 (with limited partial withdrawals after 3 years). Contributions to Tier I qualify for tax deduction under 80CCD. Tier II is a voluntary savings account with no lock-in — you can withdraw anytime. Tier II contributions do NOT qualify for tax deductions (except for government employees who get 80C benefit on Tier II). The corpus in Tier II does not qualify for the tax-free lump sum treatment at exit. Tier I must be opened first before opening Tier II.
How much is tax-free at NPS exit?
At retirement (age 60), you can withdraw up to 60% of the NPS corpus as a lump sum — this entire lump sum is tax-free. The remaining 40% must be used to purchase an annuity plan from an empanelled insurance company (IRDAI-approved). The annuity income (monthly pension) is taxable as per your income tax slab at the time of receipt. This 60% lump sum exemption makes NPS one of the most tax-efficient long-term savings instruments in India.
What are the tax deductions available for NPS contribution?
NPS offers three layers of tax deductions: (1) 80CCD(1): Up to 10% of salary (or 20% of gross income for self-employed) within the overall 80C limit of ₹1.5 lakh. (2) 80CCD(1B): Additional ₹50,000 over and above the ₹1.5 lakh 80C limit — exclusive to NPS. (3) 80CCD(2): Employer's contribution to NPS Tier I up to 10% of salary is fully deductible, not subject to any ceiling. This three-layer benefit makes NPS unique — the maximum combined deduction from NPS alone can be ₹2 lakh+ in many cases. Note: These deductions are only under the old regime.
Can I withdraw from NPS before retirement?
Yes, but with restrictions. After 3 years of account opening, you can make partial withdrawals (up to 25% of your own contributions) for specific purposes: higher education, marriage of children, purchase/construction of a house, treatment of critical illness. A maximum of 3 partial withdrawals are allowed over the account lifetime. For premature exit (before age 60), at least 80% of the corpus must be used to purchase an annuity, and only 20% can be taken as a lump sum (the reverse of the normal exit rule). The lump sum is taxable in premature exit.
Related Calculators
- PPF Calculator — Public Provident Fund maturity value with 15-year lock-in
- EPF Calculator — Employee Provident Fund corpus at retirement
- SIP Calculator — Mutual fund SIP growth with compounding
- 401k Calculator — US retirement calculator for comparison