Why is at least 40% used for annuity?

PFRDA mandates that a minimum 40% of the NPS corpus at retirement must buy an annuity. The remaining up to 60% can be withdrawn lump-sum and is tax-free.

What return should I assume?

NPS Tier-I returns have historically ranged 8–11% depending on asset mix. 10% is a reasonable middle assumption for an equity-heavy allocation.

Is NPS tax-deductible?

Yes — contributions qualify under 80C (₹1.5L) plus an additional ₹50k under 80CCD(1B).

NPS Calculator

Estimate National Pension System corpus, lump sum and monthly pension at retirement.

Inputs

Current age

yrs

Retirement age

yrs

Monthly contribution

INR

Expected annual return

Blended equity + debt long-term return

Annuity purchase %

Minimum 40% mandatory by PFRDA

Annuity rate

Yield offered by insurer on the annuity portion

Result

Estimated Corpus

₹11,396,626.62

At age 60

Total Contributions₹1,800,000.00

Lump Sum at Retirement₹6,837,975.97

Annuity Corpus₹4,558,650.65

Monthly Pension₹22,793.25

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Formula

Corpus = M × [((1+i)^n − 1)/i] × (1+i); Monthly pension = (Corpus × annuityPct/100) × annuityRate/100 / 12.

How it works

NPS is a voluntary, market-linked retirement product regulated by PFRDA, offering an additional ₹50k tax deduction under 80CCD(1B).

Example

Example: ₹5,000/month from age 30 to 60 at 10% return → ~₹1.13 crore corpus; 40% annuity at 6% gives ~₹22,600/month pension.

Frequently Asked Questions

Disclaimer: Results are estimates for informational purposes only and should not be considered financial, medical, legal, or professional advice. Always consult a qualified professional before making decisions.