NPS Calculator – National Pension Scheme Returns Calculator

Use this National Pension Scheme(NPS) Calculator to calculate the amount of pension wealth you will accumulate on retirement.

nps calculator

NPS Calculators by Banks

What is a NPS Calculator?

NPS calculator is a tool that allows an investor to get an estimate of the wealth gained, maturity amount of the entire investment, monthly pension amount to be received. This amount is based on the contribution towards NPS, tenure of investment.

The NPS calculator helps an investor estimate the amount to be invested to achieve the financial goals. The more the accumulated amount, the eventual benefit of the accumulated amount will be larger. The wealth gained is due to the power of compounding that makes NPS an attractive retirement wealth plan

An investor needs to enter the monthly or yearly investment amount, current age (>= 18 years), the withdrawal % on retirement

Example – If an investor wants to invest Rs 50000 per year in a retirement scheme. But before investing the amount and opting for a specific retirement scheme he wants to evaluate NPS investment. He now wants to know the wealth that can be gained out of NPS investment. He must use our online NPS return calculator.

He must first decide whether he wants to invest monthly or invest the entire Rs 50000 yearly at once and the amount he wants to withdraw on maturity or retirement.

Let’s say the investment type selected is yearly, current age of investor is 30 years and withdrawal % of 40%. Here, the calculator will do the calculation and the results are as below:

  • Monthly pension- Rs 34,617
  • Wealth Gained- Rs 39,56,181
  • Withdrawal (on Retirement)- Rs 98,90,453

The calculator provides the estimation of monthly pension and wealth gained and does not assure or claim the values calculated. Since the NPS scheme involves allocation of funds in equities based on the type of account selected, the actual returns may vary due to the % of allocation to equities and the performance of the underlying assets and the market conditions.

Who can use the NPS Calculator?

The NPS calculator can be used by an individual who is eligible to invest in NPS. An investor who wants to invest in NPS and wants to get an estimate of wealth to be gained for a given investment amount can use the simple and easy to use NPS calculator

All Indian citizens over the age of 18 years but not more than 60 years are eligible to invest in the national pension scheme. All applicants to NPS are required to comply with the Know Your Customer (KYC) guidelines and submit relevant documents of identity proof, address proof, bank account details, etc.

The more an investor invests in NPS scheme, the more is the accumulated amount and larger is the the retirement benefit out of the accumulated pension wealth due to power of compounding which makes NPS attractive for the investors

How the Online NPS Calculator Works?

The national pension scheme online calculator asks an investor in to input to the following,

  • Select the investment type i.e. monthly or yearly
  • Once the investment type is selected, the monthly amount or yearly amount to be entered
  • The current age of an investor, which must be more than or equal to 18 years of age
  • The withdrawal % on retirement from the NPS account.

On the basis of the above details provided the calculator calculates the following,

  1. Total amount invested and investment period
  2. The wealth gained
  3. The monthly pension post retirement.

An estimate of the total amount invested

A subscriber of the NPS scheme irrespective of being a private employee or public employee is required to make a contribution. This contribution is to be made monthly for the date of the subscription until the age of 60 years of age.

Based on the current age of the subscriber and the retirement age of 60 years of age, the NPS calculator estimates the total amount invested during the period

Total wealth gained

Once the total monthly amount invested is known, the wealth gained or returns earned is calculated by the calculator. Through the principle of the power of compounding the total amount of corpus is calculated.

The contributions towards NPS are invested in equity, debt, and government securities, hence the exact return to be earned is difficult to assess. However, an estimate of returns to be earned is calculated

Monthly pension

The NPS calculator calculates the monthly pension to be received by the subscriber based on the total corpus at the time of retirement.

How to use the NPS Calculator?

You need to enter the below details to know the accumulated corpus amount and monthly pension amount on retirement.

  • Select the ‘Investment Type’, based on whether you want to invest monthly or yearly
  • Enter the amount to be invested every month or year by you
  • Your current age, this will help determine the tenure of investment given the retirement age to be 60 years of age
  • The calculator shows calculations based on NPS with the asset allocation between equity (50%), corporate bonds (30%) and government bonds (20%). The joint fixed income return of 7% earned from the maturity amount.
  • Enter the ‘Withdrawal % on Retirement’. This is the % of pension wealth invested in the annuity plan. The percentage of the accumulated corpus you will use to buy a pension plan.
  • The withdrawal cannot be greater than 60% and the investment in the annuity plan cannot be less than 40%. If you withdraw before 60 years of age, it cannot be below 80%
  • Based on the above details entered the calculator will provide an estimate of the following,
    • wealth gained
    • monthly pension
    • total corpus created
    • withdrawal on retirement

Formula for Calculating National Pension Scheme Amounts?

To understand how the calculator calculates the monthly pension, refer to the example given below.

Mr. Arun, a government employee, subscribes to NPS.

Age at the time of opting for the subscription- 25 years

Monthly Amount- Rs 10,000

Retirement Age- 60 years of age

Investment period- 35 years (60 years minus 25 years)

Expected return on investment- 10%

Purchase of annuity- 50%

Rate of return on an annuity- 7%

Annuity period- 10 years

The result of the above investment by Mr. Arun is mentioned below:

Principal amount invested- Rs 4,080,000

Interest earned on investment (calculated on monthly compounding basis)- Rs 30,459,348

Pension wealth generated- Rs 34,539,348

Amount reinvested in annuity- Rs 17,269,674

Lumpsum amount withdrawn- Rs 17,269,674

Pension per month post-retirement- Rs 200,514

Is NPS better than PPF?

NPS and PPF, both the investment options have their own benefits and features. NPS is market-driven whereas PPF is not dependent on the market. The choice between both the options depends on the investment objective of an investor.

We have listed below a comparison between both the investments options.

Interest Rate8% to 10% Based on the historical trend8.10% Regulated by the Government
TenureTill Retirement15 years
RiskDepends on MarketNo Risk
Tax ImplicationDeduction u/s 80C up to Rs 1.5 lakh.
Additional Rs 50000 u/s 80CCD (1B)
Withdrawal after retirement
up to 40% of the fund is tax-free
Principal amount deductible
u/s 80C deduction Interest-Tax-free

Which bank is best for NPS?

Currently, there are 8 fund managers of NPS that are listed below:

  • LIC Pension Fund.
  • SBI Pension Funds Private Limited.
  • HDFC Pension Management Company Limited.
  • ICICI Prudential Pension Funds Management Company Limited.
  • Aditya Birla Sun Life Pension Management Limited.
  • UTI Retirement Solutions Limited.
  • Reliance Pension Fund.
  • Kotak Mahindra Pension Fund Limited.

These funds invest in the banking finance sector, government securities, financial institutions, and others. The returns depend on the performance of the underlying assets in the fund.

What are the withdrawing alternatives from NPS?

An investor is allowed to withdraw his accumulated amount in the NPS account before maturity. It is considered as a premature withdrawal and is allowed only on fulfillment of a few conditions.

The conditions to premature withdrawal is listed below:

  • An investor must be invested in the NPS scheme for at least 3 years.
  • A maximum of 3 premature withdrawals are allowed the entire tenure of subscription to the NPS account. The gap between each withdrawal must be 5 years.
  • The withdrawal amount must not exceed 25% of the total contribution made by an investor
  • The withdrawal is allowed only on the following occasions:
    • Marriage of children.
    • A higher Education of children.
    • Treatment of severe and critical illness of self, spouse, children, dependent parents.
    • Purchase or construction of a new residential house. If an investor already owns a residential house either jointly or solely, premature withdrawal is not allowed.

How does the NPS work and why is it beneficial for you?

For a better understanding let us look at an investors investment lifecycle in 2 stages i.e. accumulation stage and retirement stage.

Accumulation Stage

During the accumulation stage an investor accumulates funds and builds a corpus by investing in the NPS scheme, the scheme in turn invests in a mix of assets which provides wealth appreciation and returns.

The amount invested is pooled together into a pension fund. This pension fund is managed and invested by professional fund managers in diversified portfolios consisting of equities, government bonds, treasury bills, debt instruments. The portfolios grow and accumulate over the years and create a corpus for the investors depending.

The entire process of portfolio management is regulated by the PFRDA and the fund managers must comply with the approved investment guidelines.

In NPS, an investor can invest either in Auto choice or Active choice. In auto choice the allocation of funds is based on a formula dependent on the investor’s age. In active choice the allocation can be determined by the investor, but equity allocation is capped here.

Retirement Stage

During the retirement stage, the investor wants to secure his earning post retirement. NPS provides a source of income. Here, the size of retirement benefit depends on the corpus created in the accumulation stage.

Upon retirement, 60% of the accumulated corpus can be withdrawn in lumpsum or in installment. The remaining 40% of the corpus must be spend to purchase annuity plans.

Is there a minimum contribution required for the NPS?

Yes, there is a minimum contribution required for the NPS.

An investor is required to make an initial contribution at the time of registration. A minimum amount of Rs 500 for NPS Tier-I account and a minimum amount of Rs 1000 for NPS Tier-II account

The minimum contribution for subsequent contributions depends on the account type opted by investors i.e Tier-I account or Tier-II account.

Tier-I account

  • The minimum amount per contribution is Rs 500.
  • The minimum amount to be contributed in a financial year is Rs 1000.
  • A minimum one contribution is required in a financial year.

There is no limit on maximum number of contributions and the maximum amount of contributions. An investor may decide on the frequency of contributions and the amount per contribution at his/ her convenience.

Tier-II account

  • The minimum amount per contribution is Rs 250.
  • No requirement to keep a minimum balance in the NPS account.

There is no limit on maximum number of contributions and the maximum amount of contributions. An investor may decide on the frequency of contributions and the amount per contribution at his/ her convenience.

Is NPS a good investment option?

NPS is an investment scheme that fulfills the regular income requirement post-retirement. The financial goal of an investor here is to create wealth and a corpus fund that can generate a monthly income and provide a certainty of this income post retirement.

NPS invests a portion of the fund in equity and this portion is exposed to market fluctuations, risks, and rewards. The quantum of exposure in equity is dependent on multiple factors.

The financial goal of an investor here is to create wealth and he can explore other investment options as well as SIP, equity-oriented mutual funds, debt-oriented mutual funds, ELSS. These investment options are also exposed to market risk and fluctuations but come with a bonus to higher returns.

For an investor who is young and is ready to be exposed to the equity market, debt-oriented funds or a balanced fund can explore these options to earn a bonus return than NPS.

It is worthwhile to note here that NPS is a retirement investment plan and an investor must be attracted towards NPS only because of tax benefits and a balanced portfolio approach. NPS is a long-term commitment, the benefit of which will be made available only on retirement with limited options on premature withdrawal.

Depending on how much market risk and fluctuations an investor wants to take any alternative can be chosen. An investor must keep his own cost of living and earnings, other financial commitments in mind before deciding.

NPS Resources

Frequently Asked Questions

What is the current interest rate of NPS?

As of February 2020, the current interest rate on the (NPS) ranges from 9% to 12% depending on the type of scheme and subscriber.

What are the tax benefits under NPS?

The tax benefits under NPS scheme is different from other retirement investments like PPF, PMVYY, SCSS. Where other schemes are under exempt-exempt-exempt EEE tax benefit, the NPS investment scheme comes with exempt-exempt-taxable EET tax benefit. The amount invested is allowed as deduction, interest or return earned is tax-free but the corpus is not tax-free. A portion of the corpus is tax-free on retirement, another portion is put to an annuity plan and eventually taxed. NPS is allowed as deduction under section 80CCD (1) and section 80C up to Rs 1.5 lakh and additional Rs 50,000 under section 80 CCD (1B). The total amount invested towards NPS cannot exceed Rs 1.5 lakh and Rs 50,000 making it Rs 2 lakh in totality. Out of the total accumulated corpus, 40% of the accumulated corpus at maturity is tax-free. Out of 60% of the accumulated corpus withdrawn, 40% is tax-free as it is compulsorily utilized to purchase an annuity and the remaining 20% is taxable.

Which is better NPS of PPF?

National Pension Scheme (NPS) is a market-linked pension scheme offered by the Government of India. Public Provident Fund (PPF) is a government-backed savings scheme. Their similarity is that the government offers both. The following are the differences between both.Interest: Returns on NPS are market linked. They are around 12-14%. For PPF, returns are fixed and it is in the form of interest. For the current quarter it is 7.1%. Risk: NPS falls under moderate to high risk category, while PPF is a low risk investment.Taxation: Investment in NPS can qualify for tax saving up to INR 1,5 lakhs under Section 80C. Additionally INR 50,000 can be claimed under Section 80CCD(1b). 60% of the corpus withdrawn upon retirement is tax-free. Whereas, for PPF, the investment, interest and maturity amount are fully exempt from tax.

Can i invest more than 50,000 in NPS?

Under the NPS Tier – I Account, investors can invest up to INR 1,50,000 and get tax deduction under Section 80 C of the Income Tax Act. Furthermore, additional investment up to INR 50,000 qualifies under Section 80 CCD.

Is NPS risk-free?

NPS serves the dual purpose of pension and investment. NPS interest rate in the market-linked. Therefore, NPS investments are not entirely risk-free. However, investors can pick plans based on their risk tolerance levels. The investment choices under the National Pension Scheme (NPS) are Active Choice and Auto Choice.Under the Active choice, the NPS subscriber can actively decide the allocation of their investment. Under the Auto choice – life cycle fund, the investor can choose between the three options based on their understanding and willingness of risk.

Can i exit from NPS after 1 year?

No one cannot exit the NPS scheme after one year of holding the account. NPS subscribers can exit the scheme on superannuation, upon death and premature exit. The premature exit is only allowed after the subscriber has completed ten years from the date of investment. However, 80% of the corpus has to be used to purchase annuity so that the subscriber can earn a monthly pension. The remaining 20% can be withdrawn in lumpsum.

Can i stop paying NPS?

If a subscriber fails to pay or stops paying the minimum contribution amount in a year, their NPS account gets frozen. To unfreeze the account, they will have to pay the minimum required amount along with a penalty of INR 100.In a scenario where the subscriber wants to exit the scheme before reaching the age of 60 years, they can withdraw only 20% of the accumulated corpus. The remaining 80% of the corpus has to be used to buy an annuity.

What is the NPS Interest Rate?

NPS interest rates are market-linked. NPS invests across asset classes such as debt and equity. Therefore, the interest or return form NPS investments depend on the contribution made and the asset allocation. The historical returns from NPS have been in the range of 12% to 15%. However, it depends on the scheme type.Unlike most tax savings schemes, NPS doesn’t offer a fixed return. Also, since the scheme and investment varies, the interest rate in NPS has not been set as a definite amount.

Is NPS a good investment?

NPS is a pension plus investment scheme offered by the government of India. The returns from this scheme depend on the contributions made by the investor and the market. The NPS investment allows partial withdrawal of 25% for specific purposes only after three years of opening the account. NPS has a lock-in until retirement. The investment and returns are tax-free. Since it is a government offered scheme, NPS is slightly a safer bet. However, it is advised that investors assess all available investment options before choosing the one that suits their goals.