NPS Inputs
NPS Projection
Estimated Retirement Corpus
₹0
Total Contribution₹0
Tax-Free Lump Sum (60%)₹0
Annuity Corpus (40%)₹0
Estimated Monthly Pension₹0
Estimate retirement corpus, lump sum withdrawal, and annuity-based pension.
NPS offers four asset classes: Equity (E), Corporate Bonds (C), Government Securities (G), and Alternative Assets (A). Equity allocation is capped at 75% until age 50, after which it gradually reduces. Younger investors benefit from higher equity allocation for growth, while those nearing retirement should shift towards G and C for stability.
Tier 1 is the primary pension account with restrictions on withdrawal until age 60 — it qualifies for all tax benefits. Tier 2 is a voluntary savings account with no lock-in and free withdrawals, but offers no additional tax benefits (except for government employees who get 80C benefit on Tier 2 with 3-year lock-in). Minimum contribution for Tier 1 is ₹1,000 per year.
Under 80CCD(1), employee contributions up to 10% of salary are deductible within the ₹1.5 lakh 80C limit. Section 80CCD(1B) provides an additional ₹50,000 deduction exclusively for NPS, making total NPS tax benefit up to ₹2 lakh. Section 80CCD(2) allows employer contributions up to 14% of salary (central govt) or 10% (others) as a deduction with no upper cap — this is available even under the new regime.
At age 60, you must use at least 40% of your NPS corpus to purchase an annuity from an empanelled insurance company. The remaining 60% can be withdrawn as a tax-free lump sum. Annuity rates in India typically range from 5-7% depending on the type chosen — life annuity, joint life, or annuity with return of purchase price. The annuity income is taxable as per your slab.
Active choice lets you decide the exact allocation across E, C, G, and A asset classes within prescribed limits. Auto choice (lifecycle fund) automatically adjusts allocation based on your age — aggressive (LC75), moderate (LC50), or conservative (LC25) profiles are available. Auto choice suits investors who prefer a hands-off approach, while active choice benefits those who understand market cycles.
NPS pension depends on your total corpus at retirement and the annuity rate (typically 6-7%). For example, a ₹1 crore corpus with 40% annuity at 6.5% rate gives approximately ₹21,600/month pension.
NPS offers tax benefits up to ₹2 lakh: ₹1.5 lakh under 80CCD(1) within the 80C limit, plus an additional ₹50,000 exclusively under 80CCD(1B). Employer contributions up to 10% of salary are deductible under 80CCD(2).
At 60, you can withdraw up to 60% of the corpus as a tax-free lump sum. The remaining 40% must be used to purchase an annuity plan for monthly pension.
NPS potentially offers higher returns (8-12% vs 7.1%) due to equity exposure but comes with partial lock-in and mandatory annuity. PPF is fully tax-free at maturity and more flexible. Many investors use both for diversification.
Yes, NPS subscribers can choose from 7+ pension fund managers and allocate between equity (up to 75% till age 50), corporate bonds, and government securities based on their risk appetite.