Calculate National Pension System corpus at retirement. 60% lump sum + 40% mandatory annuity for monthly pension. Extra ₹50,000 deduction under 80CCD(1B) — over and above 80C limit.
Expected Annuity Rate annuity provider offers 5.5–7% PA
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Annuity Split
Lump Sum at Retirement max 60%; remaining goes to annuity
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NPS Corpus at Retirement
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Lump Sum (60%)
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Monthly Pension
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Total Invested
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Returns Generated
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NPS Retirement Breakup
Tax Savings Summary
NPS — Frequently Asked Questions
What is the 80CCD(1B) benefit?+
80CCD(1B) allows an additional ₹50,000 deduction on NPS contributions over and above the ₹1.5L 80C limit. So the total tax deduction from NPS can be up to ₹2L (₹1.5L under 80C/80CCD(1) + ₹50K under 80CCD(1B)). For someone in 30% slab with cess, this saves up to ₹15,600 per year in tax. Available only under old regime.
What is the lump sum withdrawal rule?+
At age 60 (or normal retirement), you can withdraw maximum 60% of NPS corpus as a tax-free lump sum. The remaining 40% must be used to purchase an annuity from an IRDAI-approved insurance company, which pays you monthly pension. If corpus is below ₹5 lakhs, you can withdraw the entire amount.
What returns can I expect from NPS?+
NPS returns depend on your fund allocation. Pure equity (Tier I, LC75): historical 10–12% CAGR. Balanced (LC50): 8–10%. Conservative (LC25): 7–8%. Actively managed funds like HDFC Pension and SBI Pension have delivered 10–12% CAGR over 10 years. Future returns are not guaranteed but NPS is considered one of the lowest-cost pension products globally (fund management charges: 0.01%).
Can I withdraw from NPS before 60?+
Partial withdrawal (up to 25% of contributions, not returns) is allowed after 3 years of account opening for specific purposes: higher education, marriage of children, medical emergency, purchase of first house, disability, or start-up. Only 3 partial withdrawals allowed in the entire NPS tenure. Full exit before 60 requires 80% to go to annuity and only 20% as lump sum.
What is the difference between NPS Tier I and Tier II?+
Tier I is the primary retirement account — contributions are locked in until age 60 (with limited partial withdrawal exceptions) and are eligible for tax deductions under 80C/80CCD(1B). Tier II is a voluntary savings account with no lock-in and free withdrawal anytime, but it does NOT get the same tax benefits for most subscribers (government employees get some exceptions). Tier II can only be opened if you already have an active Tier I account.
How does NPS asset allocation (Active vs Auto choice) work?+
Under Active Choice, you decide your own equity/corporate bond/government securities split, with equity capped at 75% until age 50 (gradually reducing thereafter). Under Auto Choice, allocation shifts automatically from equity-heavy to debt-heavy as you age, following one of three lifecycle funds (Aggressive LC75, Moderate LC50, Conservative LC25) — a "set and forget" option for subscribers who don't want to actively manage the mix.
Is the NPS annuity income taxable?+
Yes. Unlike the tax-free lump sum withdrawal, the monthly pension you receive from the mandatory annuity purchase is fully taxable as regular income in the year you receive it, added to your other income and taxed at your applicable slab rate. This is an important planning point — NPS is EEt (Exempt-Exempt-partially Taxed), not fully EEE like PPF or EPF.
NPS Calculator India 2026 — Understanding the National Pension System
The National Pension System (NPS) is a government-regulated, market-linked retirement scheme offering one of the lowest fund management costs of any pension product in the world, alongside a unique extra tax deduction of ₹50,000 under Section 80CCD(1B) that stacks on top of the standard ₹1.5 lakh 80C limit.
Worked Example: ₹5,000/Month from Age 30 to 60
Contributing ₹5,000 every month from age 30 to 60 (30 years) at an assumed 10% average return builds a corpus of roughly ₹1.13 crore. At retirement, you can withdraw up to 60% (₹68 lakh) tax-free as a lump sum, while the remaining 40% (₹45 lakh) is compulsorily used to buy an annuity, which at a typical 6% annuity rate generates a monthly pension of roughly ₹22,600 — taxable as regular income when received.
Why NPS Costs Less Than Almost Any Other Investment
NPS fund management charges run as low as 0.01% per year — a fraction of what actively managed mutual funds charge (typically 1-2.25%). Over a 30-year investment horizon, this cost difference alone can meaningfully change your final corpus, since even small annual fees compound significantly over decades. Combined with the extra 80CCD(1B) deduction, NPS is one of the most tax- and cost-efficient ways to build a retirement corpus in India, with the tradeoff being the mandatory 40% annuity lock at exit and the fact that annuity income is taxable.