How Your NPS Pension Is Calculated
Your monthly NPS contributions compound like a SIP until you turn 60 — each installment earns the monthly rate for every month it stays invested. At exit, current PFRDA rules let you withdraw up to 60% of the corpus tax-free; at least 40% must buy an annuity that pays your pension for life.
Monthly pension ≈ (annuity amount × annuity rate) ÷ 12. Example: contributing ₹5,000 monthly from age 30 at 10% builds ≈ ₹1.13 crore by 60. Using 40% (₹45.3 lakh) to buy a 6% annuity pays about ₹22,650 per month, while ₹68 lakh comes to you as a tax-free lump sum.
Choosing a higher annuity portion trades lump sum for a bigger monthly pension — flip the dropdown above and watch both numbers update instantly. Annuity rates (typically 5.5–7%) vary by provider and whether the plan returns the purchase price to your nominees.
Planning beyond NPS? The PPF Calculator covers the other big tax-free scheme, the Step-Up SIP Calculator models growing equity investments, and the Inflation Calculator shows what your pension will actually buy at 60.