NPS Calculator: How to Project Your Pension Corpus and Monthly Payout

Why your NPS statement never tells you what you'll actually get #

Log into your NPS account and you'll see a current balance, a list of fund managers, and maybe a return percentage. What you won't see is a proper NPS corpus projection: how much money will actually land in your bank account every month after you retire. That gap is why so many salaried employees contribute to NPS for years without a clear picture of what it's building toward.

An NPS calculator closes that gap. Punch in your age, your monthly contribution, and a reasonable return assumption, and it projects your full corpus at retirement, splits it the way PFRDA rules require, and estimates the pension that comes out the other end. This article walks through how that projection works and what to watch for when you use one.

What is an NPS calculator #

The National Pension System (NPS) is a government-backed retirement scheme where you contribute regularly, your money is invested across equity, corporate bonds, and government securities, and the corpus grows until you retire. At retirement, you can't withdraw the whole amount in cash. A part goes into an annuity that pays you a monthly pension for life, and the rest is available as a lump sum.

An NPS calculator projects three things: the size of your corpus at retirement, how that corpus splits between the annuity and the lump sum, and the monthly pension the annuity portion will pay. It's the same math your pension fund manager uses internally, just simplified into a form you can run yourself before committing another rupee.

How the projection actually works #

NPS contributions compound monthly, so the calculator treats your monthly contribution like a recurring investment growing at your expected rate of return. If you contribute an amount P every month for n months at a monthly rate i (your annual expected return divided by 12 and by 100), the corpus at the end works out to:

Corpus = P x [((1 + i)^n - 1) / i] x (1 + i)

Once that corpus is set, PFRDA rules require a minimum of 40% of it to go into an annuity. The rest is yours as a tax-free lump sum. Whatever gets annuitized then earns a fixed payout rate from the insurance company you buy the annuity from, and that rate, divided by 12, gives you the monthly pension:

Monthly pension = (Annuity amount x Annuity rate) / 12

The two rates in this formula, the expected return during accumulation and the annuity payout rate at retirement, are not the same thing, and mixing them up is where a lot of people go wrong. Your NPS corpus can grow at 10% a year while invested, but the annuity you buy with it later typically pays out at a much lower rate, closer to what a fixed-return instrument pays.

A worked example with real numbers #

Take Ravi, a 35-year-old software engineer in Pune who wants to retire at 60. He plans to contribute Rs 10,000 a month to his NPS Tier 1 account and expects a 10% average annual return over the 25 years he has left to invest, a reasonable assumption given his 70% equity allocation under the Aggressive Life Cycle Fund.

Over 25 years (300 months), his total contribution adds up to Rs 30,00,000. Running that through the formula above at a 10% expected return gives a projected corpus of roughly Rs 1,33,78,903 at age 60, of which about Rs 1,03,78,903 is investment growth.

At retirement, Ravi is required to put at least 40% of that corpus into an annuity. Assuming he sticks to the minimum:

• Annuity amount (40%): Rs 53,51,561
• Lump sum available to withdraw: Rs 80,27,342
• Annuity payout rate: 6% a year (a realistic rate for annuity plans today)
• Monthly pension: (Rs 53,51,561 x 6%) / 12 = Rs 26,758

You can run this exact scenario yourself on the NPS calculator, or check the 10,000 monthly, 25-year example page to see the full year-by-year breakdown.

If Ravi instead annuitizes 60% of his corpus (more than the mandatory minimum), his lump sum drops to Rs 53,51,561 but his monthly pension rises to around Rs 40,137. That trade-off, more cash now versus more income later, is the single biggest lever an NPS calculator lets you test before you're locked into a decision at 60.

Why running this projection early matters #

It shows you if your contribution is actually enough. A lot of people set their NPS contribution once, at whatever amount felt reasonable at 25, and never revisit it. Running the numbers every few years tells you whether Rs 10,000 a month still gets you to a pension you can live on, or whether inflation has quietly made that target harder to hit.

It separates the growth phase from the payout phase. People often assume the return they're earning now (potentially 10-12% in an equity-heavy allocation) is the same return their pension will be based on later. It isn't. Annuity rates move independently and have generally trended lower over the past decade.

It helps you plan the lump sum, not just the pension. The 60% (or more) you can withdraw as a lump sum needs its own plan: some of it might go into a Senior Citizens' Savings Scheme, some into an SWP calculator plan for a second income stream, some kept liquid for near-term expenses.

Common mistakes people make with NPS projections #

Assuming a flat 12% return for the entire tenure. NPS Tier 1 accounts under the Auto Choice Life Cycle Fund automatically shift from equity to debt as you age, so your blended return in your 50s will be lower than in your 30s. A single flat rate is a simplification, useful for a quick estimate, but run the numbers again every five years with an updated, more conservative rate as you get closer to retirement.

Ignoring that the annuity is taxable. The monthly pension you receive from the annuity is taxed as regular income in the year you receive it. The lump sum withdrawal, by contrast, is tax-free up to the prescribed limit under current rules. Factor the tax hit into your monthly income expectation, not just the gross pension figure.

Treating 40% annuitization as the "correct" default. It's the legal minimum, not a recommendation. Someone with other retirement income (rental income, EPF, a paid-off house) might prefer to annuitize the minimum and keep more as a lump sum to invest elsewhere. Someone with no other income stream might annuitize more to guarantee a higher baseline pension.

Tips for getting a realistic projection #

• Use a return assumption tied to your actual asset allocation, not an optimistic average. Check your NPS statement for your current equity-debt-government securities split.
• Re-run the calculator whenever your salary changes. A 10% annual step-up in contribution, matching typical salary increments, moves the corpus far more than most people expect.
• Model at least two annuity rates: a conservative one (5%) and today's typical rate (6-7%), so you know the range rather than a single point estimate.
• Compare your projected NPS pension against your expected monthly expenses at retirement using a retirement calculator to check if NPS alone will be enough, or if you need EPF and personal investments to fill the gap.
• If you're self-employed or want more contribution flexibility, look at how NPS compares to a PPF calculator projection for the same monthly amount; the two have different lock-in and tax treatment.

Frequently asked questions #

Is the NPS calculator's projection guaranteed? #

No. NPS returns depend on market performance, since a large chunk of the corpus sits in equity and debt instruments. The calculator's output is an estimate based on the return rate you enter, not a promised outcome. Treat it as a planning tool, and revisit the numbers periodically as your fund's actual performance becomes clear.

Can I withdraw my entire NPS corpus at retirement? #

Only if your total corpus at retirement is Rs 5 lakh or less; in that case, full withdrawal is allowed. Above that threshold, at least 40% must go into an annuity. There are also separate rules for partial withdrawals before retirement, capped at 25% of your own contributions and limited to specific purposes like a child's education or a medical emergency.

What's a realistic annuity rate to assume? #

Annuity rates from providers like LIC and SBI Life have generally ranged between 5% and 7% in recent years, though rates move with the broader interest rate environment. Since your calculator projection happens years before you actually buy the annuity, it's safer to run the numbers at a slightly conservative rate and treat a higher actual rate as a pleasant surprise.

Should I choose active or auto choice for my NPS investments? #

Active choice lets you set your own equity-debt-government securities split, up to a 75% equity cap. Auto choice (Life Cycle Fund) automatically reduces equity exposure as you age. If you're comfortable tracking and rebalancing your own allocation, active choice can give you more control; otherwise, auto choice is a reasonable hands-off default that still adjusts risk over time.

Put your own numbers in #

The gap between "I contribute to NPS" and "I know what my pension will actually be" comes down to running the projection with your own contribution amount, age, and return assumptions. Head to the NPS calculator and try a few scenarios: your current contribution, a higher one, and different annuity splits. Seeing the actual rupee numbers side by side makes the annuity decision a lot less abstract when it finally shows up at 60.