How Does an NPS Calculator Work?
The National Pension System (NPS) is a government-sponsored pension scheme designed to provide financial security after retirement. It operates similarly to a mutual fund SIP during your working years, but it has highly specific rules upon maturity (typically at age 60).
NPS Withdrawal Rules at Age 60
- Tax-Free Lumpsum (Max 60%): You can withdraw up to 60% of your accumulated total corpus entirely tax-free.
- Mandatory Annuity (Min 40%): To ensure you have a steady income, the government mandates that at least 40% of the corpus must be reinvested into a life annuity scheme. This annuity pays you a monthly pension for the rest of your life.
Our calculator uses compound interest to determine your total corpus at age 60, and then applies the annuity rate you specify to estimate your expected monthly pension.