Things You Need to Know About NPS Calculator

NPS or the National Pension System (NPS) is a retirement plan introduced by the Government of India. It is a contribution-based scheme wherein the amount of pension you will receive in the future is determined by the amount of corpus accumulated at the time the scheme matures.

The NPS calculator¹ allows you to calculate the amount of lump-sum you will get at the time of maturity when you retire based on your contributions, the annuity you select, the expected return rate and the annuity.

##Who Can Use NPS Calculator? Individuals who are qualified to invest in the National Pension Scheme can utilise the NPS calculator.

Any Indian resident above the age of 18 who is not yet 60 years old is eligible to participate in this pension plan. Individuals must also follow the KYC criteria to participate in the NPS system.

How Does The Online NPS Calculator Work?

All of your investment information is shown in the NPS calculator. The total amount obtained at maturity, as well as the interest earned and the total amount you invested, are all shown. Details such as how much you put in to get a monthly pension and how much you withdrew are also shown. The NPS calculator determines your monthly pension based on your projected annuity returns.

Formula For Calculating NPS

Let us consider a case of Mr Siddharth, a 25-year-old central givernemt employee. He wants to invest in the NPS scheme and below are the details

• Age at the time of opting for the subscription - 25 years
• Retirement Age - 60 years of age
• Monthly Amount - Rs 10,000
• Expected return on investment - 10%
• Investment period - 35 years
• Rate of return on an annuity - 7%
• Purchase of annuity - 50%
• Annuity period - 10 years

The result of the above investment by Mr. Siddharth is mentioned below:

• Interest earned on investment - Rs 3,04,59,348
• Principal amount invested - Rs 40,80,000
• Amount reinvested in annuity - Rs 1,72,69,674
• Pension wealth generated - Rs 3,45,39,348
• Monthly pension after retirement - Rs 2,00,514
• Lumpsum amount withdrawn - Rs 1,72,69,674

How Does The NPS Calculator Estimate Lump Sum Value And Annuity Value?

Based on the details you provide in the NPS Calculator like age, investment amount, type of investment, expected return rate, percentage of pension corpus to put in annuity and annuity return rate, the NPS calculator will calculate a lumpsum amount and it will show the breakdown of the lumpsum you can withdraw at the time of retirement and the amount of annuity you will get per month.

NPS Calculator For Central Govt Employees

When NPS was launched, it was initially meant only for government employees but later on the opened the scheme to individuals working in private corporations. For central government employees, it is mandatory to those recruited after 1/1/2004. Government employees make a 10% contribution of their salary and subsequent amount is contributed by the government. This NPS Calculator is based on the Pay Matrix of the 7th Pay Commission and the current technique of calculating Dearness Allowance.

What Is The Difference Between NPS Tier 1 And 2 Calculators?

The main distinction between Tier 1 and Tier 2 NPS is that the former requires payment at least once a year.

In Tier I account:

• Minimum amount per contribution to be made is ₹500.
• The minimum contribution in a financial year should be ₹1000.
• At least one contribution in a financial year should be made.

In Tier II account:

• Minimum contribution is ₹250
• No minimum balance is needed in the NPS account