Calculate Your NPS Returns
Total Corpus
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Lump Sum (60%)
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Monthly Pension
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| Year | Age | Contribution/yr | Total Invested | Corpus |
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What is NPS (National Pension System)?
The National Pension System (NPS) is a voluntary, long-term retirement savings scheme regulated by PFRDA (Pension Fund Regulatory and Development Authority). It's open to all Indian citizens aged 18-70.
How NPS Works
You contribute regularly to your NPS account during your working years. The money is invested in a mix of equity, corporate bonds, and government securities based on your chosen allocation. At age 60, you receive up to 60% of the corpus as a tax-free lump sum and must use at least 40% to buy an annuity that provides monthly pension.
NPS Account Types
- Tier I (Retirement Account): Main NPS account with tax benefits. Limited withdrawal before 60. Minimum ₹500/month or ₹1,000/year.
- Tier II (Savings Account): Voluntary account with full liquidity. No tax benefits (except for govt employees). No minimum balance requirement.
NPS Tax Benefits (FY 2025-26)
NPS offers one of the most generous tax deductions available:
- Section 80CCD(1): Employee contribution up to 10% of salary (max ₹1.5L, within the 80C limit)
- Section 80CCD(1B): Additional ₹50,000 deduction over and above the ₹1.5L 80C limit
- Section 80CCD(2): Employer contribution up to 14% of salary (central govt) or 10% (others) — no upper limit
- At maturity: 60% lump sum withdrawal is completely tax-free
Total potential tax saving: Up to ₹2,00,000 deduction (₹1.5L under 80C + ₹50K under 80CCD(1B)). At 30% tax slab, this saves ₹62,400 in taxes annually.
NPS vs Other Retirement Options
| Feature | NPS | EPF | PPF | ELSS (MF) |
|---|---|---|---|---|
| Returns | 8–12% | 8.25% | 7.1% | 10–15% |
| Risk | Market-linked | Fixed (Govt) | Fixed (Govt) | Market-linked |
| Lock-in | Till 60 | Till retirement | 15 years | 3 years |
| Extra 80CCD(1B) | ₹50K extra | No | No | No |
| Liquidity | Very Low | Low | Low | High (after 3yr) |
| Best For | Retirement | Salaried | Safe savings | Wealth creation |
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Frequently Asked Questions
Tier I requires a minimum of ₹500 per contribution or ₹1,000 per year. There's no maximum limit, though tax benefits are capped. You need to make at least one contribution per year to keep the account active.
Partial withdrawal (up to 25% of own contributions) is allowed after 3 years for specific purposes: children's education/marriage, home purchase/construction, medical treatment. Maximum 3 partial withdrawals allowed. For premature exit, 80% must go to annuity.
For young investors (under 35), choose Active Choice with 75% Equity (E), 15% Corporate Bonds (C), 10% Government Bonds (G). For moderate risk, use Auto Choice which automatically reduces equity as you age. After 50, shift towards more debt allocation.
At maturity (age 60): 60% lump sum withdrawal is fully tax-free. The 40% annuity portion is taxed as per your income slab when you receive the monthly pension. For premature exit, only 20% lump sum is allowed and it's tax-free.
PPF offers guaranteed 7.1% tax-free returns with zero risk. NPS offers potentially higher returns (8-12%) but is market-linked. NPS has the extra ₹50K tax deduction advantage. For pure retirement saving, NPS can be better due to higher returns. For risk-averse investors, PPF is safer. Ideally, use both.