An NPS Calculator is a useful online tool that helps you estimate your future retirement savings and monthly pension. By entering details such as your age, investment duration, monthly contributions, and expected rate of return, the calculator provides you with: [3]
- The total corpus you will accumulate by retirement.
- The lump-sum amount you can withdraw at maturity.
- The monthly pension is based on your chosen annuity percentage.
NPS Calculator simplifies the calculation process, eliminating the need for manual math. It helps you adjust your contributions and see how different amounts, investment periods, and return rates affect your retirement funds. Whether you are just starting or want to optimize your current plan, the NPS Calculator makes it easy to estimate your retirement outcome. It allows you to plan better, ensuring your financial goals are met by giving you a clear understanding of how much you need to save each month to achieve your desired pension. [3]
Formula for NPS Pension
The NPS Calculator simplifies calculations, but knowing the basic formula helps you make informed decisions. [3]
Steps to Calculate NPS Corpus:
Total Corpus = Monthly Contributions × Number of Months + Returns Earned.
Returns are based on the compound interest formula:
A = P (1 + r/n) ^ (nt)
Where:
A = Total maturity amount
P = Monthly or annual contribution
r = Annual return rate
n = Number of times interest is compounded annually
t = Investment duration in years
Monthly Pension:
After maturity, at least 40% of the corpus must be used to purchase an annuity in Tier 1. Your monthly pension depends on: [2]
- Annuity Allocation – Portion of the corpus used for the pension.
- Annuity Rate – Return rate of the annuity plan.
Example:
If your corpus is ₹80 lakh and you allocate 50% (₹40 lakh) to an annuity at 6%, your annual pension will be ₹2,40,000. Monthly pension = ₹20,000.