National Pension Scheme is a market-linked investment and retirement savings option by government for individual subscribers. Scripbox's NPS Calculator is the best and free to use online tool that estimates retirement savings and the monthly investment needed to reach your retirement goal.
|Investment Amount||₹ 37,20,000|
|Interest Earned||₹ 1,26,53,519|
|Wealth Gained||₹ 1,63,73,519|
|Annuity Reinvestment||₹ 65,49,408|
|Annuity Period||20 Years|
NPS Calculators by Banks
What is an NPS Calculator in India?
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 in India helps an investor estimate the investment amount 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
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.
Furthermore, 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 percentage of allocation to equities and the performance of the underlying assets and the market conditions.
How Does the Online NPS Calculator Work?
The online national pension scheme (NPS) return 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,
- Total amount invested and investment period
- The wealth gained
- 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, must 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
Upon knowing the total monthly investment amount, the calculator estimates the wealth gained or returns earned. 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, you can estimate the potential returns using the NPS calculator.
The NPS calculator calculates the monthly pension that the subscriber may receive on the basis of the total corpus at the time of retirement.
How to Use the NPS Calculator?
You need to enter the following 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 you wish to invest every month or per year
- 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%
- On the basis of the above details the calculator will provide an estimate of the following,
- wealth gained
- monthly pension
- total corpus created
- withdrawal on retirement
Who Can Use the NPS Calculator in India?
Any individual who is eligible to invest in NPS can use the Nation Pension Scheme (NPS) calculator in India. 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 must 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 retirement benefit out of the accumulated pension wealth due to power of compounding which makes NPS attractive for the investors
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 as follows:
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
Which Bank is Best for NPS?
Currently, there are 8 fund managers of NPS. Following are the banks that offer best NPS schemes:
- 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.
- NPS Contribution
- NPS Interest Rates
- NPS Forms to Download
- NPS Login & Registration
- NPS S2 Form Filling Procedure
- NPS Tier 2 Account Details
- NPS Withdrawal Rules
- What is NPS Lite
- Difference Between NPS Vs APY
- Difference Between NPS & PPF
- FATCA Declaration in NPS
- NPS Tier 1 Scheme
Frequently Asked Questions
As of December 2023, the current interest rate on the (NPS) ranges from 9.00% to 12.00% p.a. depending on the type of scheme and subscriber.
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 qualifies for 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 investment amount towards NPS cannot exceed Rs 1.5 lakh and Rs 50,000 making it Rs 2 lakh in total. 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.
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.
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.
NPS serves the dual purpose of pension and investment. NPS returns are market-linked. Therefore, NPS investments are not entirely risk-free. However, investors can pick plans on the basis of 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 on the basis of their understanding and willingness of risk.
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.
If a subscriber fails to pay or stops paying the minimum contribution amount in a year, their NPS account freezes. 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 you must use to buy an annuity.
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.
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 the government backs the scheme, NPS is a slightly safer bet. However, it is advisable that investors assess all available investment options before choosing the one that suits their goals.
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