At least 20% of the corpus has to buy a pension, and 40% in government service
This is the feature that separates NPS from an ordinary retirement fund. An All Citizen or corporate subscriber who exits at 60, or after fifteen years in the scheme, must use at least 20% of the accumulated corpus to buy an annuity from a registered provider and can take the rest as a lump sum or in systematic withdrawals; a government-sector subscriber must still annuitise at least 40%. Those are the PFRDA exit regulations as amended in December 2025, which lowered the non-government minimum from 40%. The calculator applies the minimum for the subscriber type you choose.
Corpus = annuity-due FV of monthly contributions. Pension = (corpus x annuity %) x (annuity rate / 12), the annuity % never below 20% (40% in government service).
The consequence is that the headline corpus is not the amount you receive. Splitting a ₹2 crore corpus at 20% leaves ₹1.6 crore in hand and ₹40 lakh converted into a monthly payment for life; at the government-sector 40% it is ₹1.2 crore and ₹80 lakh — two quite different financial positions from one number. Small corpora are treated differently: ₹8 lakh or less can be withdrawn in full.
The pension is the annuity corpus times the rate, divided by twelve
Monthly pension here is a simple conversion: the annuity corpus multiplied by the annuity rate, spread across the year. An ₹80 lakh annuity corpus at 6% produces ₹40,000 a month. The rate you can actually obtain at retirement is set by the market and the annuity variant you choose.
Those variants differ more than the headline rate suggests. An annuity that returns the purchase price to your nominee pays noticeably less each month than one that does not, and a joint-life option pays less again. The rate is a single input standing in for a real decision.
Starting at 30 rather than 40 is not a third more, it is far more
The contribution horizon is the gap between your current age and your retirement age, and compounding makes that gap behave non-linearly. Thirty years of contributions does not produce 50% more than twenty years at the same rate — it produces roughly double, because the earliest contributions are the ones compounded longest.
Move the current age down by five years in the tool and the corpus moves far more than the extra contributions alone account for. That difference is the entire argument for starting early, expressed as a number rather than as advice.
Asset allocation, charges, and a tax treatment that keeps moving
NPS is not a single return. Contributions are split across equity, corporate debt and government securities, and the equity share is capped and tapers with age under the auto choice. The single expected return here is an average standing in for that whole glide path.
Fund management charges, the lump sum’s tax treatment and the taxability of the annuity income all sit outside this calculation, and the rules have been revised repeatedly. Verify the current position before relying on the figure.
Frequently Asked Questions
Is the monthly pension fixed?
It depends on the annuity product you choose and the rates available when you retire. This calculator gives an estimate based on the annuity rate you enter, but the actual pension is set by the provider at the time of purchase.
How is the corpus built up?
Your monthly contributions are treated as a regular stream that compounds at the expected return until retirement. Because the early contributions have decades to grow, most of the final corpus typically comes from returns rather than the amounts you put in.
What return should I assume?
NPS lets you spread money across equity, corporate bonds, and government securities, so a blended long-term return is often modeled in the high single digits. Lean conservative if unsure; a lower assumed return simply means you plan to contribute a little more.
Are taxes and charges included?
No. The figures are gross of fund management charges and any tax that applies to the lump sum, the annuity purchase, or the pension income. Rules vary by jurisdiction, so confirm the current tax treatment where you live before relying on the totals.
How often should I review my NPS plan?
A yearly check is sensible. Returns, your contribution capacity, and your retirement timeline can all change, so a quick annual review lets you adjust the monthly amount or the asset mix while there is still plenty of time to compound.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Actual annuity income depends on the PFRDA-registered annuity product chosen.
The minimum annuity share is set by the PFRDA exit regulations and the tax on the lump sum by the Income Tax Act; both have changed before and can change again.
Small-corpus exits are not modelled: a corpus of ₹8 lakh or less can be withdrawn in full, and between ₹8 lakh and ₹12 lakh up to ₹6 lakh can be taken as a lump sum.
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Results are estimates based on the figures you enter and standard formulas. Rates, fees, taxes, and lender terms vary and change over time, so confirm important numbers with your lender or a qualified professional. This is educational information, not financial advice.
Published the calculator with its formula, worked example, assumptions, limitations and a bespoke guide, and added an automated formula test suite covering it.
Tested the corpus accumulation, the mandatory annuity split and the monthly pension the annuity corpus funds, each recomputed independently.
Tested that the lump sum and annuity corpus always add back to the full corpus, and that a 100% annuity share leaves no lump sum.
Applied the PFRDA exit regulations as amended in December 2025: the minimum annuity share is 20% for All Citizen and corporate subscribers and 40% for the government sector (it was 40% for everyone), with a subscriber-type choice, the share actually applied shown as a result, and the small-corpus exits (full withdrawal up to ₹8 lakh) stated. The description no longer calls the lump sum tax-free.
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