How it's calculated
The National Pension System invests your monthly contributions in equity, corporate bonds and government bonds. The calculator grows each contribution at the return you expect, invested at the start of its month, with an optional yearly increase. At exit it applies the PFRDA withdrawal rules to split the corpus into a lump sum and an annuity, and estimates the monthly pension.
The exit rules changed in December 2025. Private-sector and all-citizen subscribers can now take up to 80% of the corpus as a lump sum at normal exit, buying an annuity with at least 20%. Government subscribers keep the 60/40 split. A corpus of up to ₹8 lakh can be withdrawn in full.PFRDA
The formula
- Corpus = Σ each month's contribution × (1 + i)months left + 1, with i = expected return ÷ 12, plus your current balance grown the same way.
- Lump sum = corpus × (1 − annuity share), with the annuity share at least 20% (40% for government subscribers); all of it if the corpus is ₹8 lakh or less.
- Tax-free part = up to 60% of the corpus (Income-tax Act, 2025, Schedule II); a lump sum above 60% is taxable as income.Gazette of India
- Monthly pension ≈ annuity amount × annuity rate ÷ 12.
Worked example
₹10,000 a month from age 30 to 60 at an assumed 10% return builds a corpus of ₹2,27,93,253 on ₹36,00,000 contributed. Taking the maximum 80% gives a lump sum of ₹1,82,34,603, of which ₹45,58,651 is taxable, and an estimated pension of ₹22,793 a month at a 6% annuity rate.
| Line | Amount |
|---|---|
| Total contributions | ₹36,00,000 |
| Investment growth | ₹1,91,93,253 |
| Corpus at exit | ₹2,27,93,253 |
| Lump sum | ₹1,82,34,603 |
| of which tax-free | ₹1,36,75,952 |
| of which taxable | ₹45,58,651 |
| Used to buy an annuity | ₹45,58,651 |
| Monthly pension (estimate) | ₹22,793 |
Keeping the lump sum to the tax-free 60% (a 40% annuity) raises the pension to ₹45,587 a month.
Assumptions and limitations
- A constant return. NPS returns depend on your asset mix and fund manager and vary with markets.
- The annuity rate is your assumption. Insurers quote rates based on interest rates, your age and the annuity type at the time you buy.
- Normal exit only. Leaving before 60 (premature exit) requires 80% to go into an annuity unless the corpus is small.
- Contribution tax benefits are not shown. The employer's contribution is deductible up to 14% of basic + DA under the new regime; the income tax calculator includes it.