NPS Calculator
Corpus at sixty, the tax-free lump sum and the pension it buys.
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Result
Ask about NPS Calculator
Questions about what this tool does, which option to pick, or what it can and cannot handle.
The question you type here is sent to an AI provider to be answered — your files and whatever you put in the tool above are not, and the assistant cannot see them. Answers are generated and can be wrong. The tool itself is not guessing: it runs deterministic code on your device.
About the NPS Calculator
The National Pension System accumulates monthly contributions until sixty and then splits the result in two. At least forty per cent must buy an annuity that pays a monthly pension; the rest can be taken as a lump sum, tax free. This projects both halves.
The lump sum is the straightforward part — a monthly contribution compounded at whatever the underlying funds return. The pension is not, and the tool is explicit about why. It depends on the annuity rate available on the day you retire, from a provider you have not yet chosen, in a market that may look nothing like today's. Six per cent is a reasonable placeholder and nothing more. Anyone quoting you a precise pension figure thirty years out is quoting the placeholder as though it were a promise.
Two features of the scheme are worth understanding before reading the numbers. The first is that the annuity share is a floor, not a target — you may put more than forty per cent into it, and the tool accepts that, but you cannot put less. The second is that the pension is taxable as income when it arrives, while the lump sum is not. So the two halves of the same corpus are treated very differently, and a plan that maximises the tax-free half is not the same as a plan that maximises income.
The return assumption should reflect your asset mix. A contributor in the aggressive equity option and one in the conservative government-securities option are running very different schemes under the same name, and a single default rate suits neither exactly.
How to use it
- 1Enter your monthly contribution, your age now and the age you will retire.
- 2Set a return that matches your chosen asset mix rather than the scheme average.
- 3Leave the annuity share at forty per cent unless you intend to buy more pension than the minimum.
- 4Treat the monthly pension figure as an illustration — the annuity rate is the part nobody can know now.
Questions
- Why must forty per cent buy an annuity?
- Because the scheme is designed to produce a pension rather than a lump sum. The rule prevents the corpus being spent in a way that leaves nothing for later life, which is the failure the scheme exists to avoid.
- How reliable is the pension figure?
- Directionally useful, precisely worthless. It is the annuity rate you enter applied to the annuity corpus, and the real rate will be whatever the market offers on the day you buy. Treat it as a scenario.
- Is the lump sum taxed?
- The portion taken at exit is exempt within the scheme's rules. The pension itself is taxable as income in the year you receive it, which is a meaningful difference between the two halves.
- How does this compare with the provident fund?
- The provident fund pays a declared rate on a debt portfolio; this invests according to an asset mix you choose, so it carries market risk and, historically, higher long-run returns. They are complements more than substitutes.