Wondering how much you’ll have in your NPS account by the time you retire? With the National Pension System becoming a go-to option for long-term retirement planning, it’s important to know what kind of returns and pension you can expect. The Cleartax NPS Calculator helps you estimate your future corpus and monthly pension based on your contributions and investment horizon.
What Is NPS Calculator?
The Cleartax NPS calculator is an online tool that helps you estimate the retirement corpus and monthly pension you can accumulate through the National Pension System based on your monthly contributions, investment duration, expected returns, and annuity options. It also shows potential tax savings under Sections 80CCD(1) and 80CCD(1B) of the Income Tax Act, while highlighting the tax-free benefits on the lump sum withdrawal. Though it offers a close approximation, the calculator provides only indicative figures and not guaranteed outcomes.
How Does NPS Calculator Work?
The NPS calculator works by taking basic inputs such as your monthly contribution, age, expected rate of return, and chosen annuity percentage to estimate your retirement corpus. It shows your total investment, projected future value at retirement, and the potential tax-free lump sum you can withdraw (up to 60%). It also calculates the estimated monthly pension you’ll receive for life based on the annuity purchased. Additionally, after the subscriber’s demise, 40% of the corpus used for annuity is transferred to the nominee.
Example Of NPS Calculator
Consider an example to understand how the NPS calculator computes the monthly pension.
- Subscriber: Mr. A, age 21, Central Government employee
- Monthly Contribution: ₹3,600
- Investment Duration: 39 years (until age 60)
- Expected Annual ROI (during accumulation): 8%
- Annuity Purchase at Retirement: 40% of corpus
- Expected Annuity Return: 6%
Total Contribution Over 39 Years:
₹3,600 × 12 months × 39 years = ₹16,41,600
Projected Corpus at Retirement:
Based on an 8% annual return, the corpus at age 60 is projected to be ₹1,07,06,420
Lump Sum Withdrawal (60% of corpus):
60% of ₹1,07,06,420 = ₹64,23,852 (tax-free)
Annuity Purchase (40% of corpus):
40% of ₹1,07,06,420 = ₹42,82,568
Estimated Monthly Pension (based on 6% annuity return):
Monthly Pension = ₹21,413
