NPS Retirement Planner & Calculator

NPS Calculator

Use the calculator below to estimate your NPS corpus, monthly pension, and tax savings. Adjust your age, contribution, and retirement plan to see real-time projections.

Comparing NPS with a mutual fund SIP? For the full comparison, with a calculator that runs both paths on the same monthly investment, see NPS vs Mutual Fund: Which Builds a Better Retirement? This page is the NPS-only planner.

What is the National Pension System?

The National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It is open to all Indian citizens — salaried, self-employed, government employees, and even NRIs.

Under NPS, you contribute regularly during your working life. At retirement, you can withdraw a portion as a lump sum and use the remaining corpus to purchase an annuity that gives you a monthly pension for life.

Key Account Types

• Tier I — Mandatory retirement account. Has tax benefits and withdrawal restrictions until retirement. This is the core account for pension building.
• Tier II — Voluntary savings account. No lock-in, but no tax benefits either. Think of it as a flexible investment pocket linked to your Tier I.
• NPS Vatsalya — For minors. Parents can open an account for children under 18. It automatically converts to a regular Tier I account when the child turns 18.

Tax Benefits (Updated for Budget 2025)

NPS offers three layers of tax deductions under the Old Tax Regime:

• Section 80CCD(1) — Your own contribution up to ₹1.5 lakh (within the 80C limit)
• Section 80CCD(1B) — Additional ₹50,000 exclusively for NPS
• Section 80CCD(2) — Employer's contribution up to 14% of Basic + DA (raised from 10% in Budget 2025 for all employees)

Under the New Tax Regime, only the employer contribution (80CCD(2)) is deductible. This makes it the only NPS tax benefit available if you file under the new regime.

At withdrawal, non-government subscribers can take up to 80% of the corpus as a lump sum and must use at least 20% to buy an annuity (government employees: up to 60% lump sum, at least 40% annuity). Up to 60% of the corpus is tax-free; any lump sum above 60% is taxed at your slab rate. The amount used to buy the annuity is not taxed at purchase, but the monthly pension is taxable at your slab rate.

Withdrawal Rules (Dec 2025 Update)

PFRDA updated the withdrawal rules in December 2025 with significant changes for non-government subscribers:

• Corpus ≤ ₹8 lakh (Non-Govt): 100% lump sum withdrawal permitted. No annuity required.
• Corpus ₹8L – ₹12L (Non-Govt): ₹6 lakh immediate lump sum. Balance via Systematic Unit Redemption (SUR) over 6–20 years.
• Corpus > ₹12 lakh (Non-Govt): Up to 80% lump sum (vs 60% earlier). Minimum 20% annuity.
• Government employees: Max 60% lump sum, minimum 40% annuity. Small corpus ≤ ₹5 lakh can be fully withdrawn.
• Maximum age extended to 85 for staying invested (was 75 earlier).

Premature exit (before 60): at least 80% must go to annuity, only up to 20% as lump sum. Under the All Citizen Model, if the corpus is ₹5 lakh or less, 100% can be withdrawn (PFRDA).

NPS vs EPF vs PPF

Feature	NPS	EPF	PPF
Tax on Contribution	EEE (old regime); partial (new)	EEE	EEE
Equity Exposure	Up to 75% (Common Schemes); up to 100% in a non-govt MSF high-risk scheme	~15% via ETF	0%
Monthly Pension	Yes (annuity)	Via EPS only (capped)	No
Lock-in	Till age 60	Till retirement	15 years
Liquidity	Partial after 3 years	On job change	After 6 years
Corpus at Maturity	60% tax-free	Fully tax-free	Fully tax-free
Expected Returns	10–12% (market-linked)	8–8.5% (declared)	7.1% (guaranteed)
Employer Match	Up to 14% of Basic	12% of Basic	No

NPS is the only option among the three that gives you meaningful equity exposure (up to 75% in the standard schemes, up to 100% in a non-government MSF high-risk scheme) and a market-linked pension. The trade-off is the mandatory annuity purchase and the taxable pension income. EPF offers a safer, fixed return but limits equity to ~15%. PPF is the safest with guaranteed returns but zero equity and a 15-year lock-in.

Auto Choice vs Active Choice

Auto Choice is the default for most investors. It automatically reduces your equity exposure as you age:

• Life Cycle 75 — High: 75% equity until 35, tapering to 15% by 55
• Life Cycle 50 — Moderate: 50% equity until 35, tapering to 10% by 55
• Life Cycle 25 — Low: 25% equity until 35, tapering to 5% by 55
• Life Cycle Aggressive: 50% equity until 45, tapering to 35% by 55

Active Choice lets you manually set your allocation between Equity (E), Corporate Bonds (C) and Government Securities (G). Limits: E up to 75%, C and G up to 100% each; total must be 100%. Active Choice is only recommended if you understand asset allocation and can rebalance manually.

Multiple Scheme Framework (MSF): since 1 October 2025, non-government subscribers can also hold schemes designed by pension funds under PFRDA's MSF, alongside the existing (now "Common") schemes. Each MSF scheme has at least a moderate and a high-risk variant; the high-risk variant may invest up to 100% in equity. Tier I MSF schemes have a minimum vesting period of 15 years (with the option to exit at 60 or at retirement), you can switch only back to the Common Schemes during that period, and total charges are capped at 0.30% of AUM a year plus CRA, custodian and NPS Trust charges. Exit and annuity rules stay the same (PFRDA circular, 16 Sep 2025).

Annuity Types Explained

At retirement, you must use at least 20% (non-govt) or 40% (govt) of your corpus to purchase an annuity. Here are the options:

• Life Annuity — Highest monthly payout. Stops on death. No corpus returned to nominees.
• Life + Spouse — Pension continues to spouse after your death. Slightly lower payout.
• Life + Return of Purchase Price — Most popular. Nominees get the original corpus back on death. Moderate payout.
• Life + Spouse + RoP — Pension to spouse + corpus back to nominees. Lower payout.
• Life with 5 Yr Guaranteed — Pension guaranteed for 5 years even if you die early. Good for conservative investors.
• Increasing Annuity — Pension grows 3% annually to beat inflation. Starts lower but catches up over time.
• Family Income + RoP — Income to family + return of purchase price. Lowest payout but maximum security.

Your choice depends on your family situation, health, and whether you want to leave a legacy. A fee-only advisor can model the exact trade-off for your corpus.

Frequently Asked Questions

Is NPS better than PPF?

It depends on your risk appetite and time horizon. PPF is 100% safe, government-backed, and fully tax-free. NPS offers higher return potential through equity exposure but carries market risk. If you have 20+ years to retirement, the equity component in NPS can significantly outperform PPF over the long term.

Can I withdraw from NPS before retirement?

Yes, but with restrictions. You can make up to 4 partial withdrawals during your tenure, each capped at 25% of your own contributions. Withdrawals must be at least 5 years apart. The withdrawn amount is tax-free under Section 10(12B). You cannot touch the employer's contribution or the returns.

What happens to my NPS if I change jobs?

Your NPS account is portable. You can continue with the same PRAN (Permanent Retirement Account Number) regardless of employer changes. If your new employer also contributes to NPS, they will start crediting to the same PRAN.

Should I choose Auto Choice or Active Choice?

For most investors, Auto Choice is sufficient. It automatically rebalances equity exposure downward as you age. If you understand asset allocation and want to manually control your equity-debt split, you can opt for Active Choice.

Is the 60% lump sum really tax-free?

Yes, under Section 10(12A), up to 60% of the corpus withdrawn as a lump sum is tax-free. Non-government subscribers with a corpus above ₹12 lakh can take up to 80% as a lump sum, with at least 20% going to an annuity. The part of the lump sum above 60% of the corpus is taxed at your slab rate.

Want a fee-only SEBI-registered advisor to model your exact NPS strategy alongside your overall portfolio? Find a Fee-Only Advisor →