NPS Calculator

What is National Pension Scheme (NPS)?

The National Pension Scheme (NPS) is a voluntary, government-sponsored retirement savings program designed to provide financial security during old age. It's a market-linked, defined contribution pension system that allows individuals to build a retirement corpus through regular contributions during their working years.

Key Features of NPS

• Voluntary Scheme: Open to all Indian citizens aged 18-70 years
• Market-linked Returns: Investments in equities, corporate bonds, and government securities
• Flexible Contributions: Minimum ₹500 per month, no maximum limit
• Tax Benefits: Deduction under Section 80CCD(1B) up to ₹50,000
• Portability: Can be continued even after changing jobs or cities
• Regulated: Monitored by Pension Fund Regulatory and Development Authority (PFRDA)

NPS Account Types

NPS Investment Options

NPS Withdrawal Rules

• Normal Retirement: At age 60 - 60% must be used for annuity purchase, 40% can be withdrawn tax-free
• Early Exit: Before age 60 - 80% must be used for annuity purchase, 20% can be withdrawn
• Partial Withdrawal: Allowed for specific purposes (higher education, marriage) after 3 years
• Withdrawal Limits: Maximum 25% of contributions can be withdrawn partially
• Exit After 60: Can defer annuity purchase up to age 70

Tax Benefits of NPS

• Section 80CCD(1): Deduction for employee contribution up to 10% of basic salary
• Section 80CCD(1B): Additional deduction of ₹50,000 over and above 80C limit
• Employer Contribution: Exempt from tax up to 10% of basic salary
• Maturity: 60% withdrawn amount tax-free, 40% used for annuity purchase
• Annuity Income: Taxed as per regular income tax slab

NPS vs Other Retirement Options

Annuity Options at Maturity

• Life Annuity: Regular pension payments for lifetime
• Joint Life Annuity: Pension for self and spouse after death
• Annuity with Return: Corpus returned to nominee after death
• Increasing Annuity: Pension amount increases by fixed percentage annually
• Annuity Providers: Choose from empaneled insurance companies

Pension Fund Managers

• LIC Pension Fund: Conservative approach, government securities focus
• SBI Pension Fund: Balanced approach with steady returns
• UTI Retirement Solutions: Experienced fund management
• HDFC Pension Fund: Active management with growth focus
• ICICI Prudential Pension Fund: Diversified investment strategy
• Kotak Mahindra Pension Fund: Aggressive growth strategy

Who Should Invest in NPS?

• Salaried Individuals: Additional retirement savings beyond EPF
• Self-employed: Structured retirement planning option
• Young Professionals: Long-term wealth creation through equities
• Conservative Investors: Stable returns through government securities
• Tax Planners: Additional ₹50,000 tax deduction benefit

Tips for NPS Investment

• Start Early: Benefit from power of compounding over long term
• Auto Choice for Beginners: Use lifecycle funds for automatic asset allocation
• Regular Contributions: Maintain consistency in monthly investments
• Pension Fund Selection: Choose fund managers based on past performance
• Asset Allocation: Adjust equity allocation based on age and risk appetite
• Goal Planning: Calculate required retirement corpus and plan accordingly

How to Use NPS Calculator

• Monthly Contribution: Enter your planned monthly NPS investment
• Current Age: Your current age for calculation purposes
• Retirement Age: Default is 60 years (can be changed)
• Current Balance: If you have existing NPS balance
• Expected Returns: Based on your asset allocation strategy
• Results: Shows total contributions, interest earned, and estimated monthly pension