Calculate your National Pension System corpus at retirement, monthly pension income, and tax-free lump sum amount. See how equity allocation affects your retirement wealth.
The National Pension System (NPS) is one of India's most powerful retirement savings vehicles, combining the discipline of a pension scheme with the growth potential of market-linked investments. Managed by PFRDA (Pension Fund Regulatory and Development Authority), NPS is available to all Indian citizens from age 18 to 70.
NPS is unique in offering three layers of tax deductions: Under Section 80C, contributions up to ₹1.5 lakh per year are deductible. Under Section 80CCD(1B), an additional ₹50,000 is deductible — exclusive to NPS. Under Section 80CCD(2), employer contributions up to 10% of salary (14% for government employees) are deductible with no upper cap. This makes NPS particularly attractive for high-income professionals.
NPS offers three asset classes: Equity (E), Corporate Bonds (C), and Government Securities (G). Under the Active Choice plan, you can allocate up to 75% in equity. Under Auto Choice (Lifecycle Fund), allocation is automatically adjusted based on age — higher equity when young, gradually shifting to debt as you approach 60. The Aggressive Life Cycle Fund maintains 75% equity until age 35.
At retirement (age 60 or superannuation), you must invest at least 40% of the corpus in an annuity plan. The remaining 60% is tax-free on withdrawal. If your corpus is below ₹5 lakh, the full amount can be withdrawn as a lump sum. Annuities convert your corpus into a regular monthly income (pension) for life or a specified period.
Compared to EPF (8.25% fixed return), NPS offers potentially higher returns through equity exposure but with market risk. Compared to PPF (7.1%), NPS offers more flexibility and higher potential returns for long-term investors. The Sec 80CCD(1B) ₹50,000 extra deduction makes NPS a must-have for anyone who has already exhausted their Sec 80C limit.