What is NPS?
The National Pension Scheme (NPS) is a voluntary, long-term investment plan for retirement under the purview of the Pension Fund Regulatory and Development Authority (PFRDA). It is open to employees from the public, private, and unorganized sectors.
How is NPS Interest Calculated?
NPS returns are not fixed like PPF or FD. Instead, they are market-linked and depend on fund manager performance. However, for planning purposes, our calculator uses a fixed interest rate to show compounded growth over the investment period.
Benefits of NPS
- Builds a retirement corpus with discipline
- Option to choose your asset mix (equity, bonds, etc.)
- Low cost and professional fund management
- Tax deductions under Section 80CCD(1) and 80CCD(2)
- Partial withdrawals allowed after 3 years for specific purposes
How to Use the NPS Calculator
Enter your monthly basic salary, select employee and employer contribution percentages, expected annual return rate, and number of years until retirement. The calculator will project your total investment, interest earned, and final corpus at maturity.
Frequently Asked Questions (FAQs)
What is the National Pension Scheme (NPS)?
NPS is a government-regulated retirement savings plan with market-linked returns and tax benefits, aimed at creating a pension corpus for Indian citizens.
How is interest calculated in NPS?
Interest is not fixed but linked to market performance. Our calculator assumes a constant annual rate for simplicity, compounding it monthly over your chosen tenure.
What is the minimum contribution to NPS?
For Tier-I, the minimum contribution is Rs. 500/month or Rs. 1,000/year. There's no upper limit, but tax benefits are capped under Section 80C and 80CCD(1B).
Is NPS a safe investment?
NPS is regulated by PFRDA and considered relatively safe, but returns depend on market performance. It offers different fund choices to match investor risk appetite.
Is the maturity amount from NPS taxable?
60% of the corpus at retirement is tax-free. The remaining 40% must be used to buy an annuity, and annuity income is taxable as per your tax slab.