How the NPS Calculator Works
The National Pension System (NPS) is a market-linked retirement scheme regulated by PFRDA. Your monthly Tier-1 contributions are invested across equity and debt and grow until age 60. The calculator projects your corpus using the standard future-value formula:
Corpus = P × [ ((1+r)^n − 1) / r ] × (1+r)
where P is the monthly contribution, r the monthly return, and n the number of months to retirement.
What Happens at Retirement
- You can withdraw up to 60% of the corpus as a tax-free lump sum (exempt under Section 10(12A)).
- At least 40% must be used to buy an annuity, which pays your monthly pension. The pension itself is taxable as income.
NPS Tax Benefits (Three Layers)
- Section 80CCD(1): contributions within the overall ₹1.5 lakh 80C limit.
- Section 80CCD(1B): an extra ₹50,000 deduction, over and above 80C — exclusive to NPS.
- Section 80CCD(2): employer contribution (up to 10% of salary, 14% for government) deductible separately, available even in the new regime.
Note on Assumptions
Equity returns are not guaranteed; 8–11% is a common long-term assumption. The annuity rate (around 6% currently) is set when you retire. Change both inputs above to model conservative and optimistic scenarios.