NPS Calculator

NPS Calculator - Estimate Your National Pension Scheme Maturity

The National Pension System, or NPS, is a market linked retirement scheme where your contributions are invested and grow until you retire, unlike Atal Pension Yojana which guarantees a fixed pension instead. This calculator estimates what your NPS account could grow to by retirement and how that corpus can be divided between a lump sum withdrawal and an annuity that provides a regular pension afterward.

If you want the basics of retirement saving covered more generally first, our guidebook to saving and investment is a good starting point.

What Is the National Pension System (NPS)?

NPS is a voluntary, market linked pension scheme regulated by the Pension Fund Regulatory and Development Authority, open to Indian citizens between 18 and 70. Your contributions are invested across equity, corporate bonds and government securities based on either an asset allocation you choose yourself or an age based default.

The value of your NPS account can grow over time depending on how the underlying investments perform. Unlike Atal Pension Yojana, there is no fixed pension amount decided in advance. Your eventual retirement corpus depends on how much you contribute, how long you remain invested and the returns generated by the underlying investments.

You can also compare NPS with the guaranteed pension structure of Atal Pension Yojana to understand how the two schemes differ.

What Is the Difference Between NPS Tier I and Tier II?

Tier I is the main NPS retirement account and is designed to remain invested for retirement. The tax benefits associated with NPS primarily apply to Tier I contributions.

Tier II is a voluntary add on account with more flexible withdrawals. You can generally put money into Tier II or withdraw it without the same withdrawal restrictions as Tier I. However, Tier II does not provide the same tax benefits as Tier I for most subscribers. Certain government employees may be eligible for a deduction under Section 80C on Tier II contributions subject to the applicable lock in conditions.

For most subscribers, Tier II functions more like a flexible investment account, while Tier I is primarily intended for long term retirement planning.

What Are the NPS Withdrawal Rules at Maturity?

The amount you can withdraw from your NPS corpus at maturity depends on your subscriber category, accumulated corpus and the applicable exit rules. The withdrawal structure is therefore not the same for every NPS subscriber.

For non government subscribers, the current normal exit rules generally allow up to 80% of the accumulated pension wealth to be withdrawn as a lump sum, while at least 20% is used to purchase an annuity that provides a regular pension, subject to the applicable conditions. Different provisions can apply depending on the size of the accumulated corpus.

For government sector subscribers, different exit provisions may apply. For example, under the applicable rules, a portion of the corpus may need to be used to purchase an annuity, while the remaining amount can be withdrawn as a lump sum.

For illustration, if a corpus of Rs 1.34 crore were subject to a 60% lump sum and 40% annuity structure, Rs 80.3 lakh would represent the lump sum and Rs 53.5 lakh would be allocated towards the annuity. The actual amount you can withdraw and the annuity requirement will depend on the NPS rules applicable to your subscriber category and the corpus at the time of exit.

NPS exit and withdrawal rules can change over time, so check the rules applicable to your subscriber category and corpus size before making a withdrawal decision.

What Are the Tax Benefits of NPS Under Section 80CCD?

NPS provides tax deductions under different parts of Section 80CCD, with the availability of certain deductions depending on the tax regime and type of contribution.

Under the old tax regime, your own Tier I contribution can qualify for a deduction under Section 80CCD(1), subject to the applicable limits. For employees, the deduction is linked to the prescribed percentage of salary, while self employed individuals can claim it based on the applicable percentage of gross income. This deduction forms part of the overall Rs 1.5 lakh limit shared with Sections 80C and 80CCC.

Section 80CCD(1B) provides an additional deduction of up to Rs 50,000 for eligible NPS contributions, over and above the Rs 1.5 lakh limit under Section 80C, 80CCC and 80CCD(1).

Section 80CCD(2) relates to contributions made by an employer on behalf of an employee. It is available under both the old and new tax regimes, subject to the applicable limits. Following Budget 2025 changes, the applicable limit for private sector employees was increased to 14% of salary under the new tax regime, subject to the relevant conditions.

Since NPS can form part of your overall tax and retirement planning, you can also use our Income Tax Calculator to estimate your tax liability and explore our tax planning webinar. Our Retirement Calculator can also help you estimate your overall retirement corpus requirement.

FAQs

How is NPS maturity amount calculated?

The calculator projects your regular contributions forward using your expected rate of return, similar to a SIP calculation, because NPS contributions are invested rather than fixed. The final corpus depends on your contribution amount, investment period and actual investment returns. The return entered in the calculator is therefore an assumption and not a guarantee.

What are the tax benefits of investing in NPS?

Under the old tax regime, eligible subscribers can claim up to Rs 2 lakh in deductions on their own NPS contributions through Section 80CCD(1) and the additional Rs 50,000 deduction under Section 80CCD(1B), subject to the applicable limits and conditions. Employer contributions can qualify for a deduction under Section 80CCD(2) under both tax regimes, subject to the applicable percentage and conditions.

What is the difference between Auto Choice and Active Choice in NPS?

Auto Choice sets your allocation across equity, corporate bonds and government securities automatically based on your age and the selected Auto Choice option. Active Choice allows you to decide the allocation yourself within the permitted limits.

Auto Choice can be suitable for subscribers who prefer an age based allocation without managing it themselves, while Active Choice provides more control for those who want to manage their asset allocation within the permitted limits.

How much should I invest in NPS every month?

The amount you need to invest depends on factors such as your current age, retirement age, expected return and target retirement corpus. A higher contribution or a longer investment period can increase the potential NPS corpus, assuming the other factors remain unchanged. Actual returns will depend on the performance of the underlying investments.

What happens to NPS after retirement?

At retirement or normal exit, your NPS corpus is handled according to the exit rules applicable to your subscriber category and corpus size. Depending on the applicable rules, a portion can be withdrawn as a lump sum and the remaining amount may be used to purchase an annuity that provides a regular pension.

Can I withdraw money from NPS before retirement?

NPS allows partial withdrawals subject to specific conditions, while premature exit has separate rules regarding the amount that can be withdrawn and the portion that must be used for an annuity. The applicable conditions depend on your subscriber category, subscription period, corpus size and purpose of the withdrawal. The rules for a normal exit at retirement are different from those that apply when exiting NPS before retirement.