NPS (National Pension Scheme)

Plan your retirement with India's most efficient pension scheme. Calculate your monthly pension.

Monthly Investment
₹5,000
Your Age
25 Yr
Expected Return (ROI)
10%
Annuity Re-investment (%)
40%

(Min. 40% is mandatory by Govt rules)

Total Invested ₹21,00,000
Total Corpus (Age 60) ₹1.91 Cr
Lump Sum Withdrawal ₹1.15 Cr
Est. Monthly Pension ₹38,300
Open NPS Account (eNPS Portal) ↗

What is the National Pension System (NPS)?

The NPS is a voluntary, defined-contribution retirement savings scheme designed to enable subscribers to make optimum decisions regarding their future through systematic savings during their working life. It is regulated by the PFRDA (Pension Fund Regulatory and Development Authority) under the Government of India.

Unlike the old pension scheme (OPS), NPS is market-linked. Your money is invested in a mix of Equity (E), Corporate Bonds (C), and Government Securities (G) based on your preference.

Tier I vs. Tier II Accounts

Feature Tier I (Pension) Tier II (Investment)
Status Mandatory for Govt Employees Voluntary Add-on
Lock-in Until Age 60 No Lock-in (Withdraw anytime)
Tax Benefit Available (80C + 80CCD) No Tax Benefit
Min Contribution ₹1,000 / year ₹250 / contribution

The "Exclusive" ₹50,000 Tax Benefit

NPS is the only financial instrument in India that offers a tax deduction over and above the ₹1.5 Lakh limit of Section 80C.

  • Section 80CCD(1): Deduction up to 10% of salary (Basic + DA) within the overall ₹1.5 Lakh 80C limit.
  • Section 80CCD(1B): Additional deduction of ₹50,000. This is exclusive to NPS.
Impact: If you are in the 30% tax bracket, investing ₹50,000 in NPS saves you exactly ₹15,600 in taxes every year.

Withdrawal Rules (Exit Strategy)

At the age of 60, your NPS account matures. The withdrawal rules are strict to ensure you have a monthly income.

The 60-40 Rule

You cannot withdraw the entire money.
• Max 60% of the corpus can be withdrawn as a Lump Sum. This amount is 100% Tax-Free.
• Min 40% of the corpus MUST be used to purchase an "Annuity Plan" from an insurance provider (like LIC, HDFC Life).

Note: The monthly pension you receive from the annuity is taxable as per your income tax slab in retirement.

Investment Choices: Active vs. Auto

NPS allows you to decide where your money goes.

1. Active Choice

You decide the allocation. You can put up to 75% in Equity (E) up to age 50. The rest goes to Corporate Bonds (C) or Govt Securities (G).

2. Auto Choice (Life Cycle Fund)

The system automatically manages your risk based on your age.
• Aggressive (LC75): Starts with 75% Equity, reduces as you age.
• Moderate (LC50): Starts with 50% Equity. (Default option).
• Conservative (LC25): Starts with 25% Equity.

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Disclaimer & Risk Warning

Market Linked: NPS returns are market-linked and depend on the performance of the Pension Fund Manager (PFM) you choose. Past performance (usually 9-10%) is not a guarantee of future returns.

Annuity Rates: The pension amount calculated above assumes an annuity rate of approx 6%. Actual annuity rates at the time of your retirement (20-30 years later) may vary significantly.