NPS Calculator

About NPS (National Pension Scheme)

NPS is a government-sponsored market-linked pension scheme offering retirement corpus + guaranteed monthly pension. Flexible, portable, and tax-efficient.

Key Features

• Minimum Investment: ₹500/month or ₹6,000/year
• Lock-in: Till 60 years (can defer till 75)
• Returns: Market-linked (8-12% historical average)
• Annuity: Min 40% corpus for annuity purchase (mandatory)
• Lumpsum: Max 60% corpus withdrawal at retirement
• Tax Benefits: 80CCD(1): ₹1.5L + 80CCD(1B): ₹50K extra = ₹2L total

Account Types

• Tier-I (Pension): Locked till 60, tax benefits, mandatory annuity
• Tier-II (Savings): No lock-in, no tax benefit, fully withdrawable

Asset Allocation Options

• Equity (E): Up to 75% in stocks (higher returns, higher risk)
• Corporate Bonds (C): Fixed income securities
• Government Securities (G): Safest, lowest returns
• Alternative (A): REITs, InvITs (max 5%)
• Auto Choice: Age-based auto allocation (Aggressive/Moderate/Conservative)

Withdrawal Options at Maturity (Age 60)

• Mandatory Annuity: Min 40% for monthly pension
• Lumpsum: Max 60% withdrawal (taxable)
• Defer: Continue till 75 (corpus keeps growing)
• Staggered: Withdraw 60% in 10 equal annual installments

Premature Withdrawal

• Before 60: 80% annuity, 20% lumpsum (only in specific cases)
• After 3 years: Partial withdrawal (max 25%) for medical, education, home
• Before 3 years: Only if critical illness/death

Tax Benefits

• 80CCD(1): Employee contribution up to ₹1.5L (within overall 80C limit)
• 80CCD(1B): Additional ₹50,000 deduction (exclusive, over and above 80C)
• 80CCD(2): Employer contribution (10% of salary, no limit)
• Maturity: 60% lumpsum taxable, 40% annuity corpus tax-free
• Pension Income: Taxable as salary

NPS vs Other Options

• NPS vs EPF: NPS market-linked (higher risk/return), EPF guaranteed 8.25%
• NPS vs PPF: NPS ₹2L tax benefit, PPF only ₹1.5L
• NPS vs Mutual Funds: NPS has annuity lock-in, MF fully flexible
• NPS vs APY: NPS corpus-based, APY fixed pension guarantee

Who Should Invest in NPS?

• Self-employed/businessmen (no EPF)
• Looking for additional ₹50K tax deduction (over 80C)
• Want market-linked returns for retirement
• Okay with 40% annuity lock-in
• Long investment horizon (20+ years)

Annuity Options at Retirement

• Life Annuity: Pension for life (stops on death)
• Joint Life: Pension continues for spouse
• Return of Purchase Price: Corpus returned to nominee on death
• Increasing Annuity: Pension increases 3% annually

Important Points

• PRAN (Permanent Retirement Account Number) — portable across jobs
• Can switch between active/auto choice anytime
• Exit load: 0.25% if exit before 60
• Nomination mandatory