What this calculator does
The National Pension System (NPS) is a voluntary, long-term retirement investment scheme regulated by the PFRDA. It invests in equity, corporate bonds and government securities, building a retirement corpus until age 60.
Formula & Mathematical Logic
Corpus = Monthly SIP Future Value | Lump Sum = 60% Corpus | Annuity = 40% Corpus
Monthly contribution, current age, retirement age (default 60), expected portfolio return, annuity allocation (minimum 40%), and expected annuity yield.
How WealthAura calculates this
We project monthly contributions at the expected rate of return until age 60 using start-of-month compounding. At retirement, up to 60% of the corpus can be withdrawn tax-free as a lump sum, while a minimum of 40% must be used to purchase a life annuity.
Worked example
A 30-year-old contributing ₹10,000 per month for 30 years at an assumed 10% return accumulates a corpus of approximately ₹2.28 Crore. With a 40% annuity at 6%, they receive ₹1.37 Crore tax-free lump sum plus ₹45,500 monthly lifelong pension.
Input sensitivity & what changes
Allocating 75% to Equity (Active Choice) versus conservative government debt allocation can create a multi-crore difference in final retirement corpus over 25 to 30 years.
How to interpret the result
Provides a realistic blueprint of post-retirement financial independence by projecting both instant liquidity (lump sum) and monthly income.
Key factors that influence the outcome
Asset allocation choice (Auto vs Active), equity exposure limit (up to 75%), Pension Fund Manager performance, and annuity rates at the time of retirement.
Common calculation mistakes to avoid
Ignoring the extra ₹50,000 tax deduction under Section 80CCD(1B), or failing to plan for the taxable nature of monthly annuity payouts.
Underlying assumptions & legal caveats
Contributions continue uninterrupted until age 60 with regular monthly compounding. Annuity rates reflect prevailing life insurance industry norms.
Read the related guide →