NPS Calculator

What method does the NPS tool use to build the corpus?

This tool uses monthly compounding on a future-value-of-annuity formula with each contribution made at the start of the month. The annual return you type is divided by 12 to give a monthly rate, the number of months is retirement age minus current age times 12, and the corpus is the contribution × ((1 + r)ⁿ − 1) ÷ r × (1 + r). At a 0% return it simply multiplies the contribution by the number of months.

How are the lump sum and the pension split?

The “Annuity purchase %” selector offers 40%, 60%, 80% and 100%. The annuity corpus is that share of the total, the lump sum is the remainder, and the lump sum is labelled tax-free as the tool is built. The label “40% (minimum required)” is the tool’s own wording and the tool does not check it against any current rule, so the scheme documents and a qualified chartered accountant govern the actual split.

How is the monthly pension estimated?

The estimated monthly pension is the annuity corpus times the annuity rate divided by 12. That is an interest-only figure: it assumes the corpus is left intact and does not return any principal, include a rise with inflation or allow for a spouse or return-of-purchase-price option. The annuity rate field starts at 6% and has no year label.

Which return and annuity rates are built in, and do they get updated?

The expected return starts at 10% a year and the annuity rate starts at 6%. Neither carries a year or quarter label, and neither is updated automatically. Pension-scheme rules and tax rules change in nearly every Union Budget, so the scheme documents, the Income Tax Department or a qualified chartered accountant govern, and any return you enter is an assumption rather than a forecast.

What happens when retirement age is not above current age?

If retirement age is equal to or lower than current age, or the monthly contribution is zero or less, the tool returns a single line saying the corpus is ₹0. Ages need not be whole numbers, so 30.5 gives a fractional number of months. The tool does not stop you from entering a retirement age below 60.

Does a 0% return work?

Yes. A return of 0 is honoured and gives a corpus equal to the total invested, with the returns generated line showing ₹0. Clearing the return box counts as 0%, which is respected in the same way, and a negative return is read as 0%.

What is not included?

The tool does not model equity or debt fund choice, annual contribution growth, fund charges, a tax deduction for contributions, tax on the pension, or differences between Tier I and Tier II accounts. It uses one constant return for all years, so it shows the arithmetic of regular contributions rather than a prediction of any account balance.