Pension calculations and checklists
NPS pension calculator example — corpus at 60, lump sum and monthly pension under the 2025 rules
Worked NPS estimate: ₹10,000 a month for 30 years at three return assumptions, the 80:20 exit split, the annuity pension it buys and what changes for government staff.
If ₹10,000 a month goes into NPS Tier I for 30 years, the corpus at 60 is about ₹1.0 crore at an assumed 6% return, ₹1.49 crore at 8% and ₹2.26 crore at 10%. Under the exit rules amended in December 2025, a non-government subscriber can take up to 80% of that as a lump sum and must buy an annuity with at least 20%. At an illustrative annuity rate of 6.5%, the minimum 20% annuity on the 8% corpus pays about ₹16,100 a month before tax, and annuitising 40% would pay about ₹32,300. None of these returns is a forecast: NPS is market-linked, and both fund returns and annuity rates will differ from these assumptions.
The example subscriber
| Input | Value (illustrative) |
|---|---|
| Age now / exit age | 30 / 60 |
| Own contribution | ₹6,000 a month |
| Employer contribution (corporate NPS) | ₹4,000 a month |
| Total | ₹10,000 a month, unchanged for 30 years |
| Investment choice | Equity-heavy auto choice, becoming more conservative with age |
| Annuity rate at 60 | 6.5% a year (illustrative) |
Step 1: Project the corpus
Using monthly compounding (the method in the retirement corpus calculator):
| Assumed average return | Corpus at 60 | Total contributed | Growth |
|---|---|---|---|
| 6% | ₹1.00 crore | ₹36 lakh | ₹64 lakh |
| 8% | ₹1.49 crore | ₹36 lakh | ₹1.13 crore |
| 10% | ₹2.26 crore | ₹36 lakh | ₹1.90 crore |
If contributions rise 5% a year with salary instead of staying flat, the 8% case grows to about ₹2.50 crore. Raising contributions over time matters as much as the return.
Why use an average and not the equity return? Auto choice reduces equity from the 40s onward, so the blended return over 30 years is lower than an equity fund's return. NPS Trust publishes historical returns by scheme; use them as context, not as a promise.
Step 2: Split at exit
For a non-government subscriber with a corpus above ₹12 lakh at normal exit (see NPS exit rules):
| Corpus (8% case) | ₹1.49 crore |
|---|---|
| Maximum lump sum (80%) | ₹1.19 crore |
| Minimum annuity (20%) | ₹29.8 lakh |
You can choose to annuitise more than 20%, or defer exit up to 85.
Step 3: Pension from the annuity
Annuity pension = purchase price × annuity rate. Test it in the annuity pension calculator.
| Annuity share | Purchase price (8% case) | Yearly pension at 6.5% | Monthly |
|---|---|---|---|
| 20% (minimum) | ₹29.8 lakh | ₹1.94 lakh | about ₹16,100 |
| 40% | ₹59.6 lakh | ₹3.87 lakh | about ₹32,300 |
| 60% | ₹89.4 lakh | ₹5.81 lakh | about ₹48,400 |
The same exercise for the other return assumptions, at the 20% minimum:
| Return case | Corpus | 20% annuity | Monthly pension at 6.5% |
|---|---|---|---|
| 6% | ₹1.00 crore | ₹20.1 lakh | about ₹10,900 |
| 10% | ₹2.26 crore | ₹45.2 lakh | about ₹24,500 |
Step 4: Put it in today's money
₹16,100 a month in 30 years, at an assumed 6% inflation, buys what about ₹2,800 buys today (₹16,100 ÷ 5.74). This is the most important line in the calculation. The annuity pension is fixed in rupees for most options, so the lump sum part must cover rising costs.
What about the lump sum?
₹1.19 crore taken as a lump sum is not "spending money". It has to fund the rest of retirement alongside the annuity. A common approach is to put part of it in SCSS (up to ₹30 lakh per person), keep some in short deposits for emergencies, and invest the rest conservatively with planned withdrawals. The retirement income plan example shows how the pieces fit.
Government sector subscribers
Government subscribers with a corpus above ₹12 lakh must annuitise at least 40% and can take up to 60%. In the 8% case that means a minimum annuity of ₹59.6 lakh and about ₹32,300 a month at 6.5%. Central government staff in UPS get a formula-based payout instead; see the UPS guide.
Checks before you rely on an estimate
- Charges are already reflected in NAV-based returns; for projections, reduce your assumed return slightly. See NPS charges.
- Annuity rates depend on your age, the option and interest rates at the time. Joint-life and return-of-purchase-price options pay less. See annuity options.
- Tax: annuity income is taxable as income. The tax treatment of the lump sum share above 60% should be checked against current tax law.
- Partial withdrawals before 60 reduce the corpus and the compounding.
Back to the retirement corpus guide, or compare with the EPF corpus projection.
Frequently asked questions
What return should I assume for NPS?
Use at least two cases, one cautious and one moderate. Many people use 7–8% for a balanced long-run mix and test 10% as an optimistic case. Nobody can promise any of these.
Is the annuity pension fixed?
For a standard life annuity, yes, the rupee amount is fixed for life. Some insurers offer increasing annuities at a lower starting rate.
Can I take 100% if my corpus is small?
Yes, up to ₹8 lakh at normal exit. Between ₹8 lakh and ₹12 lakh, up to ₹6 lakh can be taken and the rest goes to an annuity or a systematic withdrawal over at least six years.
Does an employer contribution change the rules?
No. Employer contributions are part of the same Tier I corpus and follow the same exit rules.
