NPS Calculator — National Pension System retirement corpus

About the NPS Calculator

NPS (National Pension System) is one of India's most tax-efficient retirement vehicles — the only scheme that offers an extra ₹50,000 deduction beyond the ₹1.5L 80C limit (Section 80CCD-1B). For salaried employees with employer contributions, an additional 10% of basic+DA is deductible under 80CCD-2, on top of the 80C and 80CCD-1B limits. Stacked correctly, NPS can reduce taxable income by ₹2,00,000+ per year for a senior salaried professional.

Contributions grow through a mix of equity, corporate bonds, and government securities. You can choose your asset allocation (Active Choice — you set equity %, capped at 75% till age 50, gradually reducing thereafter) or let age-based auto-allocation happen (Auto Choice with Aggressive, Moderate, or Conservative life-cycle funds). Equity portion has historically delivered 11–13% CAGR; corporate bonds 8–9%; G-Secs 7–8%. NPS expense ratio is the lowest in India at 0.03–0.09% — vastly cheaper than even index funds.

At age 60, 60% of corpus comes out tax-free as lumpsum. The remaining 40% must buy an annuity — this calculator estimates your monthly pension assuming a typical 6% annuity rate. The mandatory annuity is the most criticized feature of NPS: annuity rates in India are low (5.5–7%) and the annuity income is fully taxable at slab rate, eroding the tax benefit you got during accumulation. Choose carefully between annuity providers (LIC, HDFC, ICICI Pru, SBI Life, Max, Tata AIA, Bajaj Allianz) and annuity types (life, life with return of purchase price, joint life).

How NPS compares to alternatives: vs EPF, NPS has lower expenses, market-linked equity exposure, and the unique 80CCD-1B benefit, but enforces annuitization. Vs PPF, NPS gives higher long-term return potential through equity but is more illiquid. Vs ELSS mutual funds, NPS has lower expenses and an extra ₹50K deduction, but ELSS has just a 3-year lock-in versus NPS until 60. The most efficient retirement stack for an Indian salaried professional: max out EPF (mandatory), max out 80C with PPF + ELSS (₹1.5L), max out 80CCD-1B with NPS (₹50K), and then add equity SIPs from post-tax savings.

NPS Tier-II is a separate, flexible account with no lock-in and no tax benefits — basically a low-cost mutual-fund-like account run by PFRDA fund managers. Useful for parking medium-term money you don't want to commit to mandatory equity SIPs but want to grow at slightly above debt rates. Withdrawal anytime without penalty. Underused but a good option for moderate-risk savers in their 40s+.