The calculation of the expected returns from NPS and the annuity amount that you can get depends on the type of investment strategy that you choose. Let’s understand these strategies and understand the annuity you can receive from each -
Aggressive Strategy Example
The aggressive investment strategy is when you invest a major part of your contribution to equity funds. In this strategy, there is high risk and high return-generating potential. Now, let’s understand with an example.
Example - Ram invests ₹10,000 every month for 35 years in the NPS scheme, retiring at 65 years. Assuming a return of 12% p.a. and expected annuity payout till 100 years, here’s what his investment would look like -
Total amount invested
| ₹42 lakhs
|
Amount on maturity @12% returns
| ₹6.43 crores
|
Commuted amount
| 60% of ₹6.43 crores = ₹3,85,80,000
|
Corpus for annuity
| ₹2,57,20,000
|
Lifetime annual annuity @8% return
| ₹20,43,388
|
Moderate Strategy Example
The moderate strategy combines equity and debt to generate moderate returns at a moderate risk profile.
Example - Ram invests ₹10,000 every month for 35 years in the NPS scheme, retiring at 65 years. Assuming a return of 10% p.a. and expected annuity payout till 100 years, here’s what his investment would look like -
Total amount invested
| ₹42 lakhs
|
Amount on maturity @10% returns
| ₹3.80 crores
|
Commuted amount
| 60% of ₹3.80 crores = ₹2,28,00,000
|
Corpus for annuity
| ₹1,52,00,000
|
Lifetime annual annuity @8% return
| ₹12,07,601
|
Conservative Strategy Example
The conservative investment strategy is where the majority of your contribution is directed to debt funds for stable returns. The risk is low, and so is the return-generating potential.
Example - Ram invests ₹10,000 every month for 35 years in the NPS scheme, retiring at 65 years. Assuming a return of 12% p.a. and expected annuity payout till 100 years, here’s what his investment would look like -
Total amount invested
| ₹42 lakhs
|
Amount on maturity @12% returns
| ₹2.29 crores
|
Commuted amount
| 60% of ₹2.29 crores = ₹1,37,40,000
|
Corpus for annuity
| ₹91,60,000
|
Lifetime annual annuity @8% return
| ₹7,27,738
|
All the figures are for illustrative purposes only
An ISO 9001:2015 
