How it's calculated
Contributions are deducted every month, so the calculator adds each month's contribution and applies one twelfth of the yearly return. Pay rises once a year, which steps the contribution up every twelfth month rather than a little each month.
The annuity share is not a flat 40%. NPS Trust publishes bands by the size of the accumulated pension wealth, and the calculator applies the band your projected corpus falls into, which is the table below.
Estimate only. Official results, marks and eligibility are decided by NPS Trust and the PFRDA. Verify on the official website.
Worked example
Someone with ₹60,000 a month as basic pay plus DA, contributing 10% with 14% from the employer, 25 years from retirement, assuming pay rises 3% a year and the corpus earns 8% a year:
- Paid in over the period: ₹63,00,161 (₹26,25,067 from them, ₹36,75,094 from the employer)
- Growth on top, at the assumed 8%: ₹1,14,46,583
- Corpus at retirement: ₹1,77,46,743
- Above ₹12 lakh, so at least 40% (₹70,98,697) must buy an annuity
- Taking exactly 40% at an assumed 6% annuity rate: ₹1,06,48,046 as lump sum and about ₹35,493 a month
Change any assumption and every figure changes. The 8% return and the 6% annuity rate are illustrative, not forecasts.
How much of the corpus must buy an annuity
At a normal exit in the government sector, NPS Trust sets the minimum annuity by the size of the accumulated pension wealth:
| Accumulated pension wealth | What the rule requires |
|---|---|
| Up to ₹8,00,000 | Entire APW can be withdrawn as lump sum, or taken as periodic payouts (SLW or SUR). |
| ₹8,00,000 to ₹12,00,000 | Up to ₹6 lakh may be taken as lump sum or as periodic payouts; the balance must buy an annuity, or be taken as SUR for at least 6 years. |
| Above ₹12,00,000 | At least 40% of the APW must buy an annuity; the balance is paid as lump sum or as periodic payouts. |
In the non-government sector the top band requires 20% instead of 40%. Accumulated pension wealth (APW) decides how much of the corpus must buy an annuity at a normal exit. Most calculators apply 40% to every corpus, which is wrong below ₹12 lakh. SLW is systematic lump-sum withdrawal and SUR is systematic unit redemption, both periodic payout options. Contribution rates and tax limits carry their own source and date: the rates come from PFRDA, the tax limits from NPS Trust, and the tax limits move with each Finance Act. Checked 26 September 2026.
How NPS is taxed
These are the statutory limits as NPS Trust states them, not advice, and they move with each Finance Act. The calculator above does not work out your tax; it projects the corpus and the pension.
| Your own contribution | Deductible up to 10% of salary under section 80CCD(1), inside the overall ceiling of ₹1,50,000 under section 80CCE. |
|---|---|
| The extra deduction | A further ₹50,000 under section 80CCD(1B), over and above the 80CCE ceiling. |
| Employer contribution | Deductible under section 80CCD(2) up to 10% of salary under the old tax regime and 14% under the new one. The two are not the same, and pages that quote a single figure are wrong for one of the regimes. |
| Lump sum at exit | The 60% lump sum taken at 60 or on superannuation is exempt under section 10(12A), and a partial withdrawal is exempt up to 25% of your own contribution under section 10(12B). |
| The pension itself | Buying the annuity is exempt, but the pension it pays is taxable as income in the year you receive it. The monthly figure this calculator shows is therefore before tax. |
Frequently asked questions
How much of my NPS corpus must buy an annuity?
It depends on the size of the corpus, not a flat 40%. NPS Trust publishes three bands for a normal exit in the government sector: up to ₹8 lakh the whole amount can be withdrawn; between ₹8 lakh and ₹12 lakh you may take up to ₹6 lakh and the balance buys an annuity; above ₹12 lakh at least 40% must buy an annuity. This calculator applies the band your projected corpus falls into.
Is the pension figure guaranteed?
No, and nobody can guarantee it. The corpus depends on the return your funds actually earn, and the pension depends on the annuity rate available on the day you retire. Both are figures you choose here, so treat the result as arithmetic on your assumptions, not as a promise.
What pay is the contribution worked out on?
The monthly figure used here is basic pay plus dearness allowance. Enter what your own pay slip shows, and set the contribution percentages to match it — the calculator does not assume them for you.
Does the government contribution count as mine?
It goes into your NPS account and grows with it, so the corpus includes both shares. The result shows the two separately so you can see how much came from each.
What is the difference between a lump sum and an annuity?
The lump sum is paid to you when you exit. The annuity is a pension bought from an annuity service provider with part of the corpus, which then pays you monthly for life. The bands above decide the smallest share that must go to the annuity.
Why does the projection use monthly compounding?
Contributions are deducted monthly, so the calculator adds each month’s contribution and applies one twelfth of the yearly return. Pay rises once a year, which steps the contribution up every twelfth month.
Is the NPS pension taxable?
Buying the annuity is exempt, and so is the 60% lump sum taken at 60 or on superannuation under section 10(12A). The pension the annuity then pays you is taxable as income in the year you receive it, so the monthly figure here is a before-tax figure.
Does this cover the Unified Pension Scheme?
No. This page is only about NPS. UPS is a separate scheme with its own rules, and it is not calculated here.
Sources
- NPS Trust: Normal Exit — rules for the government and non-government sectors, National Pension System Trust (NPS Trust)
- PFRDA: NPS for Central Government — "Employee Contribution - 10% of the employee's salary (Basic plus DA)"; "Employer Contribution - 14%"; mandatory for those who joined on or after 1 January 2004, Pension Fund Regulatory and Development Authority (PFRDA)
- NPS Trust: Tax Benefits under NPS — 80CCD(1), 80CCD(1B), 80CCD(2), and sections 10(12A) and 10(12B), National Pension System Trust (NPS Trust)