NPS Pension Calculator

The National Pension System is a voluntary pension scheme in which you invest each month in funds of your choice until retirement. Unlike a bank deposit, the return is not fixed: it depends on the funds. When you retire, the rules require part of the corpus to be used to buy an annuity, a product that pays a monthly pension for life, and allow the rest to be taken as a lump sum. This calculator follows the whole path, from monthly contributions to the pension they might buy.

How the corpus grows

You enter your age, the retirement age, a monthly contribution, a yearly increase in the contribution, any balance you already have and an expected return. Each month the balance grows by the return divided by 12 and the contribution is added at the end of the month. Once a year the contribution rises by the percentage you choose. The result is the corpus on the day you retire, with the total you contributed and the growth shown separately.

A worked example

The defaults are a 30-year-old contributing 10,000 a month, rising 5% a year, with a return of 9% until 60. The corpus is 2,97,18,353, of which 79,72,662 is contributions and 2,17,45,691 growth. With 40% buying an annuity, 1,18,87,341 goes into the annuity and the lump sum is 1,78,31,012. At an annuity rate of 6% the monthly pension is 59,437. In today’s money, at 6% inflation, that pension is worth 10,349. A 40-year-old contributing 25,000 a month with a 3% rise, and putting 60% into an annuity at 6.5%, reaches 2,05,97,260 and a pension of 66,941, which is 20,873 in today’s money.

Lump sum and annuity

The annuity share is the choice that matters at retirement. A larger share gives a larger monthly pension and a smaller lump sum. The annuity is bought from an insurer and its rate depends on your age, the type of annuity (with or without return of the purchase price) and the market. The page uses a plain rate that you enter, so replace the default with the quotes you are offered when you retire. The pension is taxable as income.

The pension in today’s money

A pension of 59,437 sounds generous, but it is received 30 years from now. Prices rise, so the last result divides it by the inflation factor to show what it would buy in today’s terms. With the default 6% inflation the factor is nearly 5.7, so the real value is about a sixth. This is why long-term plans should be judged in real terms and why a pension plan benefits from a rising contribution, which is the reason for the step-up field.

Edge cases

The retirement age must be later than your age. The annuity share cannot be below 40. A step-up of zero keeps the contribution flat. A return of zero returns your contributions and any starting balance. The table lists the corpus at the end of each year up to 60 years.

Limits

Returns are not guaranteed and the page assumes a constant rate. Fees charged by fund managers and the pension fund regulator are not deducted. The tax rules for withdrawal, the choice of annuity provider and any changes to the scheme are not modelled, so check the latest NPS rules before you plan.

Related tools

• Retirement and FIRE Calculator puts a pension into a plan that includes all your other savings.
• EPF Calculator projects the provident fund that many salaried people also build.
• 80C Tax Calculator shows how an NPS contribution can lower tax under the old regime.
• SIP Calculator shows the growth of a market-linked monthly investment outside a pension account.