NPS Calculator
Plan your retirement corpus with NPS.
Retirement Corpus (Age 60)
The National Pension System (NPS) is India's modern answer to retirement security. Regulated by the PFRDA, it moves away from the old 'defined benefit' pension model to a 'defined contribution' model. It allows you to build a market-linked retirement corpus that beats inflation over the long term.
With low fund management charges (among the lowest in the world) and exclusive tax benefits, NPS has become a mandatory component of any smart retirement portfolio.
💰 The ₹50,000 Tax Secret
Most people know about the ₹1.5 Lakh limit under Section 80C. But NPS offers something special.
Under Section 80CCD(1B), you can claim an additional deduction of ₹50,000. This is exclusively for NPS Tier 1 contributions. If you fall in the 30% tax bracket, investing this ₹50k saves you a flat ₹15,600 in taxes every year.
Where is your money invested? (Asset Classes)
NPS does not offer a fixed interest rate. Instead, your money is invested in four asset classes:
- Class E (Equity): Stocks. High risk, high return. (Max capped at 75%).
- Class C (Corporate Bonds): Fixed income debt instruments issued by companies. Medium risk.
- Class G (Government Securities): Bonds issued by Central/State Govt. Lowest risk.
- Class A (Alternative Assets): REITs, InvITs, etc. (Max 5%).
Active Choice vs Auto Choice
You have full control over your portfolio:
Active Choice
You decide the percentage split (e.g., 75% Equity, 25% Debt). Best for financially savvy investors who want to maximize equity exposure.
Auto Choice (Lifecycle)
The system automatically rebalances your portfolio based on your age. As you get closer to 60, it shifts money from Equity to Debt to protect your corpus from crashes.
Exit & Withdrawal: The 60-40 Rule
NPS matures when you turn 60. You cannot withdraw the entire amount and walk away. Here is the rule:
- 60% Lump Sum: You can withdraw up to 60% of the accumulated corpus. This amount is completely Tax-Free.
- 40% Annuity: You MUST use at least 40% of the corpus to purchase an "Annuity" (Pension Plan) from an insurance provider. This ensures you get a monthly pension for life.
- Tax on Pension: The monthly pension you receive from the annuity is treated as income and taxed as per your slab.
Frequently Asked Questions
What is the difference between Tier 1 and Tier 2?
<strong>Tier 1:</strong> The primary retirement account with tax benefits and lock-in until age 60.<br/><strong>Tier 2:</strong> A voluntary savings account with no tax benefits and no lock-in (you can withdraw anytime). You need a Tier 1 account to open Tier 2.
Can I exit NPS before 60?
Yes, but it's restrictive. You must use 80% of the corpus to buy an annuity, leaving only 20% as lump sum. Partial withdrawals (25% of own contribution) are allowed for specific reasons like illness or house purchase after 3 years.
Are NPS returns guaranteed?
No. Returns depend on market performance. However, historical data suggests 9-10% returns for conservative portfolios and 12%+ for equity-heavy portfolios.