NPS Calculator — National Pension System Returns
Calculate your NPS corpus, lump sum withdrawal, and estimated monthly pension at retirement. Updated for December 2025 PFRDA withdrawal rules.
• Tax benefits under Section 80C and 80CCD
• Regulated by PFRDA for safety
• Mandatory annuity purchase at maturity
• Maximum equity allocation: 75%
Your NPS Results
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What is NPS?
The National Pension System (NPS) is a voluntary, long-term retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It allows you to build a retirement corpus through regular contributions that are invested in a mix of equity, corporate bonds, and government securities based on your chosen allocation. NPS returns range between 9-12% depending on equity allocation, making it one of the highest-returning government-backed retirement instruments in India.
How NPS Works at Retirement — Updated Rules (December 2025)
PFRDA significantly revised NPS withdrawal rules in December 2025, making the scheme considerably more flexible for non-government subscribers. Here is what the current rules say:
For Non-Government Subscribers (All Citizen Model):
Corpus ≤ ₹8 lakh: 100% withdrawal as lump sum allowed — no annuity required
Corpus ₹8L–₹12L: Up to ₹6 lakh as lump sum, remaining via annuity or Systematic Withdrawal Plan (SWP)
Corpus above ₹12 lakh: Up to 80% as lump sum (tax-free), minimum 20% must buy annuity — significantly better than the old 60:40 rule
Premature exit lock-in: 5-year mandatory lock-in has been removed for non-government subscribers
Defer withdrawal: Can now stay invested till age 85 (earlier limit was 70)
Partial withdrawals: Now allowed up to 4 times (was 3), with minimum 4-year gap between withdrawals
For Government Subscribers:
Corpus ≤ ₹5 lakh: 100% lump sum allowed
Corpus above ₹5 lakh: Old 60:40 rule applies — 60% lump sum (tax-free), 40% must buy annuity
Source: PFRDA Circular, December 2025. Rules apply at exit/retirement age 60.
Estimating Monthly Pension from Annuity
Current annuity rates from PFRDA-empanelled insurers (LIC, SBI Life, HDFC Life, ICICI Pru Life) range from 5.5% to 7.5% per year depending on plan type, age at purchase, and insurer. A joint life annuity with Return of Purchase Price (ROP) pays slightly less than a single life annuity because the insurer returns the corpus to nominees after death.
Example calculation (non-govt subscriber, corpus above ₹12L):
Corpus at 60: ₹1 Crore | Lump sum (80%): ₹80 lakh (tax-free)
Annuity corpus (20%): ₹20 lakh at 6.5% annuity rate
Monthly pension: ₹20L × 6.5% ÷ 12 = ₹10,833/month (taxable as income)
Pension is taxable as per your income slab in retirement. Effective tax depends on total income including other sources.
NPS Tax Benefits
- Section 80CCD(1): Up to 10% of salary (or 20% of gross income for self-employed) deductible under overall 80C limit of ₹1.5 lakh
- Section 80CCD(1B): Additional ₹50,000 exclusive to NPS — over and above the ₹1.5 lakh 80C limit. Only available under old tax regime.
- Section 80CCD(2): Employer's NPS contribution (up to 14% of basic for govt, 10% for private) — deductible with no upper limit. Available under both old and new tax regime.
- Tax on maturity: Lump sum withdrawal (up to 80% for non-govt) is tax-free. Annuity pension is taxable as income per your slab.
- Effective tax burden: Even in the 30% slab, PFRDA notes the effective tax on NPS is ~12% (30% on 40% annuity corpus), comparable to 12.5% LTCG on equity mutual funds.
NPS Asset Classes and Returns (FY 2025-26)
| Asset Class | What It Invests In | Max Allocation | Historical Return |
|---|---|---|---|
| Equity (E) | Stocks, index funds | 75% (Active Choice) | 10-13% CAGR |
| Corporate Bonds (C) | AAA/AA corporate debt | 100% | 8-9% CAGR |
| Govt Securities (G) | Central/state govt bonds | 100% | 7-8.5% CAGR |
| Alternative (A) | REITs, InvITs | Discontinued | Scheme A discontinued Jan 16, 2026 |
Source: PFRDA. Returns are historical averages and not guaranteed. Scheme A (Alternative Assets) has been discontinued effective January 16, 2026 per PFRDA circular.
Frequently Asked Questions
Has the 60:40 rule changed for NPS in 2026?
Yes — significantly for non-government subscribers. As of December 2025, if your NPS corpus exceeds ₹12 lakh, you can now withdraw up to 80% as a tax-free lump sum with only 20% going into annuity (down from the earlier mandatory 40% annuity). For government employees, the old 60:40 rule still applies for corpus above ₹5 lakh. This 80% withdrawal is optional; you can still choose to buy a higher annuity if you prefer more monthly pension.
What is the maximum equity allocation in NPS?
Under Active Choice, you can allocate up to 75% in Equity (Class E). Note that Scheme A (Alternative Assets — REITs, InvITs) has been discontinued effective January 16, 2026. Under Auto Choice (Lifecycle Fund), equity starts at 75% before age 35 and reduces automatically with age per the selected lifecycle fund type.
Can I withdraw from NPS before 60?
For non-government subscribers, the 5-year mandatory lock-in for premature exit has been removed as of December 2025. However, premature exit still requires at least 80% to go into annuity (worse than normal exit). Partial withdrawal (up to 25% of your own contributions) is now allowed up to 4 times before age 60 for education, marriage, medical treatment, or home purchase — with a minimum 4-year gap between withdrawals.
Is NPS better than PPF for retirement?
NPS generally offers higher long-term returns (10-12% vs PPF's 7.1%) due to equity exposure, plus an additional ₹50,000 tax deduction under 80CCD(1B) not available under PPF. However, the ₹50,000 deduction is only available under the old tax regime. Under the new tax regime, NPS's main advantage is the employer contribution deduction under 80CCD(2). For retirement planning, an NPS + PPF combination works well — PPF for the guaranteed tax-free foundation, NPS for market-linked growth with additional tax benefits.
What return rate should I assume for NPS in the calculator?
With 75% equity allocation (Active Choice, aggressive), expect 10-12% CAGR over a 20-30 year horizon based on historical data. With 50% equity (moderate), expect 9-10%. The calculator uses a blended rate — use 10-11% for a 75% equity allocation as a conservative long-term planning assumption. Do not use recent 3-5 year returns as a baseline — equity NPS funds returned 18-21% over 5 years ending 2025 due to bull market conditions, which is not representative of long-term averages.
Related Reading
NPS in India — The Annuity Catch and Whether You Should Invest
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Does the ₹50,000 NPS Deduction Still Work Under the New Tax Regime?
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