How does the NPS pension work at retirement?

At age 60, you cannot withdraw the entire NPS corpus. PFRDA rules require that at least 40% of the accumulated corpus be used to buy an annuity from an empanelled life insurer, which then pays you a fixed monthly pension for life. The remaining up to 60% can be withdrawn as a tax-free lump sum. The monthly pension depends on how much you annuitise and the annuity rate at the time (commonly 5–7%). You may choose to annuitise more than 40% for a larger pension. This calculator lets you set both the annuitised share and the annuity rate to see the resulting pension.

What returns can I expect from NPS?

NPS is market-linked, so returns are not guaranteed and depend on your asset allocation across equity (E), corporate bonds (C), and government securities (G). Historically, NPS funds have delivered roughly 9–12% annually over long periods for equity-oriented allocations, and somewhat less for debt-heavy ones. Because you choose the mix (or use a default lifecycle fund that de-risks as you age), your actual return varies. This calculator asks you to enter an expected return so you can model different scenarios; use a conservative figure for planning and treat the projection as an estimate, not a promise.

What are the tax benefits of NPS?

NPS offers three tax advantages. Contributions are deductible under Section 80CCD(1) within the ₹1.5 lakh Section 80C limit; an additional ₹50,000 is deductible under Section 80CCD(1B), over and above the 80C ceiling — a benefit unique to NPS; and for salaried employees, the employer’s NPS contribution is deductible under 80CCD(2). At retirement, the lump-sum withdrawal (up to 60%) is tax-free, while the annuity pension is taxed as income in the year received. The extra ₹50,000 deduction is the headline reason many people add NPS on top of their existing 80C investments.

Can I withdraw from NPS before retirement?

NPS is designed to be locked until 60, but limited early access exists. Partial withdrawals of up to 25% of your own contributions are allowed after three years for specific purposes — children’s education or marriage, buying or building a house, or treating serious illness — subject to conditions. Full premature exit before 60 is allowed, but then at least 80% of the corpus must be annuitised (only 20% can be withdrawn), making early exit unattractive. This calculator projects to your chosen retirement horizon; the locked-in nature is part of what makes NPS a retirement product rather than a flexible investment.

How is NPS different from EPF and PPF?

All three are retirement vehicles, but they differ in structure. EPF is mandatory for salaried employees with a fixed contribution and a government-set interest rate — low risk, no market exposure. PPF is a voluntary fixed-rate government scheme with a 15-year term, also no market risk. NPS is voluntary and market-linked, so it carries investment risk but offers higher potential returns and the unique extra ₹50,000 deduction — with the trade-off of compulsory annuitisation at retirement. Many people use all three together: EPF and PPF for stability, NPS for growth and the extra tax break. Compare them using this calculator alongside the EPF and PPF tools.

Is the information I enter stored anywhere?

No. The entire projection runs in JavaScript inside your own browser. Nothing you enter — your contribution, expected return, years, or annuity assumptions — is uploaded, logged, or stored on any server. The tool is free, needs no login, and closing the tab clears everything. The projection is an estimate based on your inputs and assumes a constant return and annuity rate; actual NPS outcomes depend on market performance and the annuity rates available at your retirement, so treat the figures as a planning guide rather than a guarantee.

Finance

NPS Calculator

Project your NPS retirement corpus and monthly pension — from your monthly contribution, expected return, and years to retirement, modelling the mandatory 40% annuitisation and the lump sum you can withdraw. Free, in your browser, nothing uploaded.

By the Samastam teamLast updated 2026-06-24Editorial standards

NPS details

Monthly contribution (₹)

₹

₹4,200/month uses the full ₹50,000 annual 80CCD(1B) deduction.

Expected return (% per year)

Market-linked. NPS funds have historically returned ~9–12% long-term.

Years to retirement

Annuitised share (%)

Annuity rate (%)

Minimum 40% annuitised. A higher share means a larger pension, smaller lump sum.

At retirement

Total corpus: —
Total invested: —
Tax-free lump sum: —
Monthly pension: —

Enter your monthly contribution and years to retirement on the left. Your projected corpus, lump sum, and monthly pension update here as you type.

The National Pension System (NPS) is a voluntary, market-linked retirement scheme regulated by the PFRDA, in which you contribute regularly during your working years into a fund invested across equity and debt, and at retirement (age 60) you take part of the accumulated corpus as a tax-free lump sum and must use the rest to buy an annuity that pays you a monthly pension. At least 40% of the corpus must be annuitised; the other 60% can be withdrawn. This calculator projects both outcomes: enter your monthly contribution, expected annual return, years to retirement, the share you annuitise, and the annuity rate, and it shows your retirement corpus, the lump sum, and the monthly pension. Everything runs in your browser; nothing you enter is sent anywhere.

What this is and why it matters

The National Pension System exists to solve a specific problem: most Indians reach retirement without a pension, since the organised pension net covers only government and some formal-sector workers. NPS extends a structured, low-cost, market-linked pension to anyone — salaried or self-employed — who chooses to save for retirement. You open an account, contribute regularly during your working years, and your money is invested by professional fund managers across equity, corporate bonds, and government securities according to an allocation you choose or a default lifecycle that grows more conservative as you age. The account is portable across jobs and locations, and the costs are among the lowest of any managed retirement product in India, which is a large part of its appeal over a multi-decade horizon.

What distinguishes NPS from a pure investment like a mutual-fund SIP is what happens at retirement. When you reach 60, you cannot simply withdraw the entire corpus. The rules require that at least 40% of the accumulated amount be used to purchase an annuity — a product from a life insurer that pays you a fixed monthly pension for the rest of your life. The remaining up to 60% can be withdrawn as a tax-free lump sum. This forced annuitisation is deliberate: it converts your savings into a guaranteed income stream so you do not outlive your money. The size of the monthly pension depends on two things you control in this calculator — how much of the corpus you annuitise (40% minimum, but you may choose more) and the annuity rate the insurer offers, which is linked to prevailing interest rates.

The other reason NPS is attractive is tax. Contributions qualify for deduction under Section 80CCD(1), within the overall ₹1.5 lakh Section 80C ceiling, and — uniquely — an additional ₹50,000 under Section 80CCD(1B), over and above that ceiling, which no other instrument offers. For salaried employees, the employer’s NPS contribution is also deductible under 80CCD(2). At retirement, the 60% lump sum is tax-free, while the annuity pension is taxed as income in the year you receive it. The trade-offs — market risk during accumulation, compulsory annuitisation, and pension taxed later — are the price of the low costs and the extra tax break. Projecting the corpus and pension in advance, as this calculator does, helps you judge whether NPS, alongside EPF and PPF, will give you the retirement income you need.

How to use this tool

Enter your monthly contribution. Type the amount you plan to invest in NPS each month. There is no upper limit; many people contribute enough to use the ₹50,000 annual 80CCD(1B) deduction (about ₹4,200 a month) plus more. The projection updates as you type, with nothing submitted anywhere.

Set your expected annual return. NPS is market-linked, so the return depends on your equity/debt allocation — historically NPS funds have delivered roughly 9–12% over long periods for equity-heavy allocations. Enter a realistic long-run figure; the field is editable so you can model conservative and optimistic scenarios.

Enter your years to retirement. Type how many years until you turn 60 (or your planned retirement). NPS rewards a long horizon heavily because of compounding, so the difference between starting at 30 and 40 is dramatic — try both to see the effect.

Choose your annuitisation share and annuity rate. Set the percentage of the corpus you will annuitise — the minimum is 40%, but you can choose more for a larger pension. Then set the annuity rate, the annual return the pension annuity pays (commonly 5–7%, linked to interest rates). A higher annuitised share or rate raises your monthly pension but lowers your tax-free lump sum.

Read the corpus, lump sum, and pension. The result shows three figures: your total retirement corpus at 60, the tax-free lump sum you can withdraw, and the monthly pension the annuitised portion will pay. Adjust the annuitisation share to see the trade-off between a bigger lump sum now and a bigger pension for life, and use the figure alongside the EPF and PPF calculators to plan your full retirement income.

Examples and use cases

A 30-year-old planning for retirement at 60

A 30-year-old contributes ₹10,000 a month to NPS, expecting a 10% annual return over 30 years. The corpus grows to roughly ₹2.28 crore. Annuitising the minimum 40% (about ₹91 lakh) at a 6% annuity rate yields a monthly pension of around ₹45,600, while the remaining 60% — about ₹1.37 crore — is available as a tax-free lump sum. The long 30-year horizon and compounding do most of the work, illustrating why starting NPS early matters so much.

The lump-sum vs pension trade-off

An investor with a projected ₹1 crore corpus compares annuitising 40% versus 60%. At 40%, the lump sum is ₹60 lakh and the pension (at 6%) is about ₹20,000 a month; at 60%, the lump sum drops to ₹40 lakh but the pension rises to about ₹30,000 a month. The calculator makes this trade-off concrete, helping the investor decide between more cash at retirement and more guaranteed lifelong income — a choice that depends on their other assets and income needs.

Using the extra ₹50,000 tax deduction

A salaried employee already exhausting the ₹1.5 lakh 80C limit through EPF and insurance contributes an additional ₹4,200 a month (₹50,400 a year) to NPS, claiming the extra ₹50,000 deduction under Section 80CCD(1B). Over 25 years at 10%, even this modest contribution builds a corpus of roughly ₹56 lakh, part of which becomes a pension — a retirement asset effectively subsidised by the annual tax saving, which no other instrument offers beyond the 80C ceiling.

A late starter at 45

Someone starting NPS at 45 with ₹20,000 a month and a 15-year horizon at 10% builds a corpus of about ₹83 lakh — far less than a 30-year horizon would yield from the same monthly amount, because there is less time to compound. The calculator shows the late starter that a larger monthly contribution only partly compensates for the shorter horizon, reinforcing that time in the market is the dominant factor in any retirement projection.

Frequently asked questions

How does the NPS pension work at retirement?: At age 60, you cannot withdraw the entire NPS corpus. PFRDA rules require that at least 40% of the accumulated corpus be used to buy an annuity from an empanelled life insurer, which then pays you a fixed monthly pension for life. The remaining up to 60% can be withdrawn as a tax-free lump sum. The monthly pension depends on how much you annuitise and the annuity rate at the time (commonly 5–7%). You may choose to annuitise more than 40% for a larger pension. This calculator lets you set both the annuitised share and the annuity rate to see the resulting pension.
What returns can I expect from NPS?: NPS is market-linked, so returns are not guaranteed and depend on your asset allocation across equity (E), corporate bonds (C), and government securities (G). Historically, NPS funds have delivered roughly 9–12% annually over long periods for equity-oriented allocations, and somewhat less for debt-heavy ones. Because you choose the mix (or use a default lifecycle fund that de-risks as you age), your actual return varies. This calculator asks you to enter an expected return so you can model different scenarios; use a conservative figure for planning and treat the projection as an estimate, not a promise.
What are the tax benefits of NPS?: NPS offers three tax advantages. Contributions are deductible under Section 80CCD(1) within the ₹1.5 lakh Section 80C limit; an additional ₹50,000 is deductible under Section 80CCD(1B), over and above the 80C ceiling — a benefit unique to NPS; and for salaried employees, the employer’s NPS contribution is deductible under 80CCD(2). At retirement, the lump-sum withdrawal (up to 60%) is tax-free, while the annuity pension is taxed as income in the year received. The extra ₹50,000 deduction is the headline reason many people add NPS on top of their existing 80C investments.
Can I withdraw from NPS before retirement?: NPS is designed to be locked until 60, but limited early access exists. Partial withdrawals of up to 25% of your own contributions are allowed after three years for specific purposes — children’s education or marriage, buying or building a house, or treating serious illness — subject to conditions. Full premature exit before 60 is allowed, but then at least 80% of the corpus must be annuitised (only 20% can be withdrawn), making early exit unattractive. This calculator projects to your chosen retirement horizon; the locked-in nature is part of what makes NPS a retirement product rather than a flexible investment.
How is NPS different from EPF and PPF?: All three are retirement vehicles, but they differ in structure. EPF is mandatory for salaried employees with a fixed contribution and a government-set interest rate — low risk, no market exposure. PPF is a voluntary fixed-rate government scheme with a 15-year term, also no market risk. NPS is voluntary and market-linked, so it carries investment risk but offers higher potential returns and the unique extra ₹50,000 deduction — with the trade-off of compulsory annuitisation at retirement. Many people use all three together: EPF and PPF for stability, NPS for growth and the extra tax break. Compare them using this calculator alongside the EPF and PPF tools.
Is the information I enter stored anywhere?: No. The entire projection runs in JavaScript inside your own browser. Nothing you enter — your contribution, expected return, years, or annuity assumptions — is uploaded, logged, or stored on any server. The tool is free, needs no login, and closing the tab clears everything. The projection is an estimate based on your inputs and assumes a constant return and annuity rate; actual NPS outcomes depend on market performance and the annuity rates available at your retirement, so treat the figures as a planning guide rather than a guarantee.