NPS Calculator
Estimate NPS corpus, lump sum, and annuity split.
What is NPS?
The National Pension System (NPS) is a government-regulated retirement savings scheme offering market-linked returns through professional fund management. It has two tiers: Tier I (tax-benefited, locked until retirement) and Tier II (voluntary, liquid). NPS offers flexibility in asset allocation and is portable across employers.
NPS Investment Options
- •NPS offers four asset classes: Equity (E)—invests in stocks, max 75% allocation; Corporate Bonds (C)—invests in high-rated corporate debt; Government Securities (G)—invests in government bonds; Alternative Assets (A)—includes REITs and infrastructure funds. Choose Active Choice (self-select) or Auto Choice (age-based).
NPS Tax Benefits
Tier I contributions qualify for tax deduction up to $2,000 under general provisions plus an additional $50,000 exclusive deduction. Employer contributions are also tax-deductible. At maturity, 60% of the corpus is tax-free, while the annuity portion (40%) provides taxable pension income.
NPS Withdrawal Rules
At age 60: Up to 60% lump sum (tax-free), minimum 40% annuity purchase. Early exit (before 60): Minimum 80% must go to annuity, 20% lump sum. Partial withdrawal (Tier I): Allowed for specific purposes (education, marriage, home purchase, medical) up to 25% of contributions, after 3 years.
NPS vs Other Retirement Options
NPS offers higher potential returns (market-linked) compared to PPF/EPF (fixed returns) but carries market risk. NPS has lower costs (fund management charges ~0.01-0.09%) compared to mutual funds. The mandatory annuity ensures lifelong income but reduces lump sum availability.
Comparison Analysis
NPS vs EPF vs PPF
| Criteria | NPS | EPF | PPF |
|---|---|---|---|
| Returns | Market-linked (10-12% equity) | 8-9% (government-set) | 7-9% (government-set) |
| Risk | Market risk | Zero risk | Zero risk |
| Lock-in | Until age 60 | Until age 58 | 15 years |
| Tax on Maturity | 60% tax-free, 40% annuity taxable | Tax-free (after 5 years) | Tax-free |
| Cost | Very low (0.01-0.09%) | Zero | Zero |
Content Verification
Expert Review
Reviewed by Vikram Mehta, Certified Financial Planner (CFP), NPS Advisory Specialist
Authoritative Sources
Based on PFRDA regulations, NPS Trust guidelines, and Income Tax provisions
Last Reviewed
Content verified May 2026 against current NPS regulations and tax rules