Estimate your National Pension System (NPS) corpus at retirement, monthly pension from annuity, tax-free lump sum withdrawal, and total tax savings. Plan your NPS contributions for a secure retirement.
Total NPS Corpus
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Monthly Pension
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Lump Sum (60%)
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Total Invested
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Wealth Multiplier
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The National Pension System (NPS) is a government-sponsored, defined contribution retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Available to all Indian citizens aged 18-70 years, NPS combines the benefits of market-linked returns with tax advantages that are unique and not available through any other investment instrument in India.
NPS was initially launched in 2004 for government employees and was made available to all citizens in 2009. It has since become one of the most cost-effective retirement planning tools, with fund management charges as low as 0.01% — significantly lower than mutual funds.
| Asset Class | Invests In | Historical Returns | Risk Level |
|---|---|---|---|
| Class E (Equity) | Equity & equity-related instruments | 10-14% CAGR | High |
| Class C (Corporate Bonds) | Fixed income corporate bonds | 8-10% CAGR | Medium |
| Class G (Govt Securities) | Government bonds, T-bills | 7-9% CAGR | Low |
| Class A (Alternative) | REITs, InvITs, CMBS | Varies | Medium-High |
NPS offers the most generous tax deduction structure among all investment instruments in India:
| Feature | NPS | PPF | ELSS |
|---|---|---|---|
| Returns | 8-12% (market-linked) | 7.1% (fixed) | 12-15% (market-linked) |
| Risk | Low-Medium | Zero | High (equity) |
| Lock-in | Till age 60 | 15 years | 3 years |
| Extra deduction | Rs 50,000 under 80CCD(1B) | No | No |
| Tax on returns | 60% lump sum tax-free | Fully tax-free (EEE) | 10% LTCG above Rs 1.25L |
| Liquidity | Very low | Low | Medium (after 3 yrs) |
| Best for | Additional tax saving + retirement | Risk-free long-term saving | Growth-oriented 80C |
There are currently 7 pension fund managers (PFMs) approved by PFRDA to manage NPS investments. You can choose one PFM, and switch once per financial year if unsatisfied with performance. Here is a comparison of their historical performance in the equity (E) asset class:
| Fund Manager | 5-Year Return (Equity) | 10-Year Return (Equity) | AUM (Approx.) |
|---|---|---|---|
| SBI Pension Fund | 13.8% | 12.1% | Largest |
| HDFC Pension Fund | 14.2% | 12.5% | Large |
| ICICI Pru Pension Fund | 13.5% | 12.0% | Large |
| Kotak Pension Fund | 13.9% | 11.8% | Medium |
| UTI Pension Fund | 13.4% | 11.7% | Medium |
| LIC Pension Fund | 13.1% | 11.5% | Large |
| Axis Pension Fund | 13.6% | N/A (newer) | Small |
Note: Returns are approximate and vary over different time periods. Past performance does not guarantee future results. Data as of early 2026.
When you retire from NPS, you must purchase an annuity from an empanelled insurance company (LIC, SBI Life, ICICI Pru, HDFC Life, etc.) with at least 40% of your corpus. This annuity provides your monthly pension for life. Key decisions you will need to make:
Recommendation: For most retirees, "Annuity for life with return of purchase price to spouse" offers the best balance of regular income, inflation protection (through the 60% lump sum invested elsewhere), and family security.
| Feature | Tier I (Mandatory) | Tier II (Voluntary) |
|---|---|---|
| Lock-in | Till age 60 (with limited partial withdrawals) | No lock-in — withdraw anytime |
| Tax benefit on investment | 80CCD(1) + 80CCD(1B) = up to Rs 2L | No tax benefit (except govt employees) |
| Tax on withdrawal | 60% lump sum tax-free | Gains taxable as per holding period |
| Minimum contribution | Rs 1,000/year | Rs 250/contribution |
| Purpose | Retirement savings | Voluntary savings/investment |
| Switching | Between asset classes allowed | Between asset classes allowed |
Tier II NPS works like a liquid mutual fund with ultra-low expense ratio (0.01%). However, since it offers no tax benefits (for private sector), most investors are better served using liquid/debt mutual funds for non-retirement short-term goals. Tier II is mainly useful for government employees who get Section 80C benefit on Tier II contributions with 3-year lock-in.
Opening an NPS account is simple and can be done entirely online through the eNPS portal (enps.nsdl.com):
You can also open NPS through your bank (most major banks are Point of Presence), post office, or through the Protean (formerly NSDL) eNPS app. Corporate NPS can be opened through your employer's HR department.