Corpus Allocation at Retirement
NPS Corpus Formula
The NPS corpus at retirement is calculated using the standard future value of monthly annuity formula with monthly compounding:
- P = Monthly NPS contribution
- r = Expected annual return rate (decimal)
- n = Number of months (investment duration × 12)
At maturity: 60% of corpus = tax-free lump sum. 40% mandatory annuity purchase → Monthly pension = (Annuity Fund × Annuity Rate%) / 12.
Year-by-Year NPS Growth Schedule
| Year | Age | Annual Contribution | Interest Earned | Corpus Balance |
|---|
Frequently Asked Questions
NPS (National Pension System) is a voluntary, defined-contribution pension scheme launched by the Government of India in 2004 and opened to all citizens in 2009. Any Indian citizen aged 18–65 years can open an NPS account. NPS is mandatory for Central Government employees (except Armed Forces) joining after January 1, 2004. Private sector employees and self-employed individuals can join NPS voluntarily for retirement savings and tax benefits.
Tier-1 is the primary NPS pension account with restrictions on withdrawal until retirement (age 60). Tax benefits under 80CCD apply only to Tier-1. Tier-2 is a voluntary savings account with no withdrawal restrictions — you can withdraw any time. However, Tier-2 provides no tax deduction (except for Central Govt employees). Minimum Tier-1 contribution is ₹500/month or ₹6,000/year. This calculator assumes Tier-1 contributions.
NPS offers two investment options: (1) Auto Choice (Lifecycle Fund) — automatically adjusts equity/debt ratio based on your age; starts at 75% equity at age 18, reducing to 15% at age 55. (2) Active Choice — you manually choose equity (E), corporate bonds (C), government bonds (G), and alternative assets (A). For long investment horizons (>20 years), equity-heavy allocation (50–75% E) historically provides 10–12% returns. This calculator uses your custom expected return rate.
Yes, partial withdrawal is allowed after 3 years of NPS account opening, up to 25% of your own contributions (excluding employer contribution), for specific purposes: higher education of children, marriage of children, purchase/construction of residential house, medical treatment of critical illness, or setting up a business. Maximum 3 partial withdrawals are permitted in the entire subscription period.