Estimate your National Pension System corpus at 60 — how much comes out as a tax-free lump sum, how much buys the annuity, and the monthly pension it pays.
How this NPS calculator works
Your monthly contributions compound at the assumed return until age 60. At exit, the corpus splits: at least 40% buys an annuity (the slider lets you go higher), and the rest is paid out as a lump sum:
Corpus at 60 = monthly contributions compounding at r/12
Monthly pension = annuity corpus × annuity rate ÷ 12
Two honest caveats: NPS returns are market-linked, not fixed; and annuity rates at your retirement, decades away, are unknowable today — treat both as planning assumptions.
Worked example: start at 30 with ₹5,000 a month
Contributing ₹5,000 a month from age 30 to 60 (total invested ₹18,00,000) at an assumed 10% return builds a corpus of about ₹1,13,96,627 (₹1.14 crore). Keeping the annuity share at the 40% minimum: ₹68,37,976 comes to you tax-free as lump sum, ₹45,58,651 buys the annuity, and at a 6% annuity rate the pension is roughly ₹22,793 a month (taxable at slab).
Tier I vs Tier II
This calculator models Tier I — the actual pension account with the lock-in and all the tax benefits. Tier II is an optional add-on account with free withdrawals but no tax advantages for most subscribers; think of it as a mutual-fund-like side pocket.
NPS tax benefits (as of FY 2025-26)
- 80CCD(1): your own contribution, within the overall ₹1.5 lakh 80C ceiling (old regime).
- 80CCD(1B): an extra ₹50,000 deduction over and above 80C — old regime only, and the single biggest reason salaried savers in the old regime open NPS.
- 80CCD(2): employer contribution up to 14% of basic + DA — this one works in the new regime too, making employer NPS the main deduction left there.
Check how these interact with your slab in our income tax calculator.
What happens at 60
Up to 60% of the corpus is withdrawable as a tax-free lump sum. The remaining minimum 40% must purchase an annuity from a regulated insurer — joint-life, return-of-purchase-price and other options exist at different rates, which is why the annuity-rate field is editable. The pension is taxed as income at your slab. If the total corpus is small (₹5 lakh or less), the whole amount can be withdrawn.
Frequently Asked Questions
How is the NPS pension calculated?
Your contributions compound until 60; at exit, at least 40% of the corpus must buy an annuity, which pays the pension. Monthly pension = annuity corpus × annuity rate ÷ 12. Example with this page's defaults (age 30, ₹5,000/month, assumed 10% return): corpus about ₹1,13,96,627, of which 40% (₹45,58,651) at a 6% annuity rate pays roughly ₹22,793 a month.
Is the 60% lump sum from NPS really tax-free?
Yes — at age 60 (or superannuation), up to 60% of the corpus can be withdrawn as a lump sum completely tax-free (as of FY 2025-26). The remaining minimum 40% must purchase an annuity, and the monthly pension it pays is taxed at your slab rate as income.
Does the extra ₹50,000 deduction under 80CCD(1B) work in the new tax regime?
No. The ₹50,000 self-contribution deduction under Section 80CCD(1B) — over and above the ₹1.5 lakh 80C limit — is available only in the old regime. In the new regime, the NPS tax break that survives is the employer contribution under 80CCD(2), up to 14% of basic + DA (as of FY 2025-26).
What return does NPS give?
NPS is market-linked — there is no fixed rate. Your return depends on the equity/corporate-debt/government-bond mix you choose and the fund manager. The 10% default here is a planning assumption for a balanced mix, not a promise; set it lower for a conservative, government-bond-heavy allocation.
Can I withdraw from NPS before 60?
Partially: up to 25% of your own contributions, for specific needs (illness, education, marriage, house), at most three times. A full premature exit before 60 allows only 20% as lump sum — 80% must buy an annuity — which is why NPS is best treated as locked-till-60 money.
NPS vs PPF — which should I pick?
Different animals. PPF is guaranteed, fully tax-free, and flexible after 15 years; NPS is market-linked with higher growth potential, an extra ₹50,000 deduction (old regime), but a mandatory annuity at exit whose pension is taxable. Many savers fund both: PPF as the safe floor, NPS for equity-linked retirement growth. Try the
PPF calculator to compare.
Estimates are for information and education only — not financial, tax or investment advice. Verify current rates and rules with official sources.