NPS Calculator

NPS calculator is an online calculator that helps you estimate the lump sum pension amount you will get at retirement. It is calculated based on the contributions you make, annuity purchased, and expected rate of return on investment. This calculation can help you plan your savings and build an adequate retirement corpus.

The money invested experiences compounded growth, thereby yielding superior returns over time. The greater the accumulated sum, the larger the benefits derived from it.

Read: How to Withdraw from NPS?

The National Pension System calculator is an online tool that offers numerous benefits. Some of the most important ones are:

• Accurate Retirement Planning

  You can accurately determine your retirement corpus and future pension income. It helps you know how much you should invest to achieve the desired pension corpus. Additionally, it empowers you to set a realistic financial goal for your retirement.

• Easy Access and Convenience

  The NPS pension calculator is accessible from any internet-enabled device, offering flexibility and convenience. It also has a user-friendly interface that enables quick computation of the precise amount.

• Investment Strategy Estimation

  It enables you to estimate your maturity corpus for different investment strategies, such as aggressive, moderate, and conservative. You can also create a custom NPS investment plan by inputting your contribution amount and expected interest rate.

• Tax Efficiency

  Under Section 80CCD (1) of the Income Tax Act, you can also use NPS for tax benefits. The National Pension Plan calculator allows you to estimate the potential tax savings associated with your investments, facilitating tax-efficient financial planning.

• Asset Allocation Estimation

  When you invest in the NPS, your funds are distributed across various asset classes, including equities, debts, and government securities. A National Pension Fund calculator helps you determine the ideal allocation to these classes based on your risk tolerance and financial objectives.

People who want to invest in the scheme may utilise the NPS return calculator. According to the regulations, any Indian national aged 18-60 year is eligible to invest in the pension plan. Moreover, applicants must follow the Know-Your-Customer (KYC) regulations to begin investing.

You can invest in it, if you are:

1. Private Sector Employee
2. Government Employee
3. Self-Employed
4. Individual Reaching Retirement

The online NPS scheme calculator considers your inputs and estimates your corpus at retirement. It also provides you with the amount of pension you can expect based on your fund investment at maturity.

Follow the steps below to calculate the value of your NPS pension that you will have in the future:

• Choose an Investment Amount

  The first step is to enter the amount you would like to contribute every month. Remember to save at least 10% of your annual income for retirement if you are starting at the age of 30. If you are savings after 30 years, the percentage should be higher.

• Choose a Suitable Type of Portfolio

  The NPS returns will depend on the type of portfolio you choose for fund allocation. The riskier the assets, the higher the returns you can expect. However, ensure that your choice does not exceed your risk appetite. While using a NPS calculator, you can choose an ROI between 4% to 12% per annum.

• Enter your Retirement Age

  The calculator considers the years you can contribute towards the scheme. The usual retirement age is 60 years. However, you can even extend it for a higher annuity amount.

• Finalise the Ratio of Annuity Allocation at Maturity

  It represents the portion of your corpus, the amount you wish to reinvest to acquire an annuity upon maturity. It is the monthly pension payments that you will receive from the Annuity Service Provider (ASP).

  You must invest at least 40% of the maturity value in an annuity plan. However, if you plan to exit the scheme before 60 years, minimum 80% of your pension should be reinvested in an annuity.

• Provide the Expected ROI on Annuity Plan

  After you input the details mentioned above, you will have to enter the expected rate of annuity, the amount you expect from your pension. The NPS annuity calculator will help you get the accurate details of your investment.

• Choose the Annuity Period

  You can withdraw a higher amount if your expected annuity period is less. However, the recommended plan would be to invest in a lifetime annuity. Thus, consider the highest age at which, you want to continue receiving it.

Based on the above-provided inputs, you will get the following details:

1. Total amount invested
2. The investment tenure
3. The interest you will earn
4. Pension wealth you will gain at maturity
5. Total savings on tax

The formula for NPS Calculation is:

Maturity value (MV) = P x (1 + R/N) ^ NT

Where,

1. P = Principal invested,
2. R = Assumed rate of return or the expected rate of return,
3. N = The Number of times the growth rate compounds, and
4. T = The Tenure of the investment

Example for NPS Calculation

To understand the formula better, consider the below example:

Aditya, aged 25, wants to use the NPS scheme calculator to check if he should invest in it for his retirement years. He has an investing capacity of ₹5,000 per month and an aggressive investment approach that can produce a 14% return over a 35-year investment horizon (retirement age 60 minus present age).

The tool will provide the following:

1. Principal invested = ₹21 lakh
2. Gains made on the principal invested = ₹5.41 crore
3. Total maturity value = ₹5.62 crore (principal invested of ₹21 lakh + gains made of ₹5.41 crore)
4. Lump sum withdrawn @40%, which implies he has withdrawn 60% of the money = ₹3.37 crore
5. Money invested for annuities = ₹2.25 crore
6. Expected monthly pension = ₹1.24 lakh

Investing in the National Pension Yojana is a secure option as it is regulated by the Pension Fund Regulatory and Development Authority (PFRDA), which ensures the best interests of investors. You can learn more about the the scheme online by visiting their official website. Check the details carefully and consider investing if its benefits align with your investment goal.