NPS Calculator: Pension and Corpus at 60

How the NPS calculator works

The calculator adds your monthly contribution until age 60, growing at the return you choose, just like a SIP. At 60 it splits the corpus in two:

1. Annuity part: a share of the corpus buys an annuity from an insurer, which pays a monthly pension for life. Under the exit rules amended by PFRDA, the minimum is 20% for non-government subscribers and 40% for government subscribers. The pension shown is that amount × annuity rate ÷ 12.
2. Lump sum: the rest, up to 80% for non-government and 60% for government subscribers, can be withdrawn. For a small corpus, below a limit set by PFRDA, the whole amount can be taken out.

Example: start at 30, ₹5,000 a month, 10% a year. You put in ₹18 lakh. The estimated corpus is ₹1,13,96,627. With 40% in an annuity at 6%, the pension is about ₹22,793 a month and the lump sum about ₹68.4 lakh. With the 20% minimum, the pension falls to about ₹11,400 and the lump sum rises to about ₹91.2 lakh.

Start age makes the biggest difference

Starting at 40 with double the contribution still ends with far less than starting at 25. Remember that these are future rupees: at 6% inflation, ₹1 crore in 30 years buys what about ₹17 lakh buys now.

Choosing an expected return

NPS lets you choose your own mix of equity and bonds within PFRDA limits, or let a life cycle fund shift it with age. Your return depends on that mix and on markets.

• Mostly equity: try 9% to 11%.
• Balanced: try 8% to 9%.
• Mostly government and corporate bonds: try 7% to 8%.

Past returns of NPS schemes are published by the pension funds and on the NPS Trust website. Use them as a guide, not as a promise, and keep your plan sound even at the lower figure.

NPS pension calculator: the annuity part

An annuity is a product from a life insurer that turns a lump sum into a lifelong monthly income. Rates depend on your age, the type of annuity (for example, with or without return of purchase price, single or joint life) and interest rates at the time you buy. The NPS annuity calculator above lets you set the share you annuitise and the rate.

Putting more than the minimum into the annuity raises the pension but lowers the lump sum. Annuity income is taxed as income each year. A lump sum of up to 60% of the corpus is tax free; check the tax treatment of anything above 60% with a tax adviser. A guaranteed pension suits some people better than a large lump sum they must manage. Others keep the minimum annuity and invest part of the lump sum elsewhere, for example in the Senior Citizens Savings Scheme.

NPS calculator for government employees

Central government employees under NPS contribute 10% of basic pay plus DA, and the government adds 14%. To use the calculator, add the two and type the total as your monthly contribution. On ₹50,000 basic plus DA, that is ₹12,000 a month (₹5,000 plus ₹7,000). Government staff also had the option of the Unified Pension Scheme; if you chose it, your benefit follows that scheme's own formula instead.

Private sector employees can get an employer contribution through the corporate NPS model. Add it to your own for the calculation.

Tax benefits and withdrawals in short

• Your own NPS contribution has had an extra deduction of up to ₹50,000 under the old regime, over the small savings limit.
• Employer contributions get a deduction under both regimes, within limits.
• Partial withdrawal is allowed after a few years for set needs such as children's education, marriage, a house or illness.
• Exit before 60 needs at least 80% of the corpus in an annuity in most cases.
• You can now stay invested beyond 60, up to age 85.

Both the tax sections and the NPS exit rules have changed recently, so confirm the details on the PFRDA website before you plan.

NPS alongside EPF and PPF

Most salaried people have EPF as their base. NPS adds equity exposure and a pension. PPF adds a tax free, fixed rate pot. Compare all three with the EPF calculator, the PPF calculator and this NPS return calculator. For a child, the NPS Vatsalya calculator shows how a minor's account grows to 18.