Nps Calculator

The National Pension System (NPS) is a voluntary retirement scheme regulated by the PFRDA in India. It offers excellent, exclusive tax benefits under Section 80C and Section 80CCD(1B), but these benefits come with strict liquidity constraints.

When you reach age 60, your NPS account finally matures. However, you cannot withdraw your entire accumulated corpus as a lump sum to use however you want.

• 60% Lump Sum: You are legally allowed to withdraw up to 60% of your total corpus completely tax-free.
• 40% Annuity: You are legally mandated to use the remaining 40% (minimum) to purchase an Annuity plan from a PFRDA-registered life insurance company.

An annuity is a financial product that pays you a fixed, regular pension for the rest of your life. When you purchase the annuity with 40% of your NPS corpus, that lump sum money is effectively gone—you hand it over to the insurance company forever, and in return, they guarantee you a monthly payout.

It is critical to note that the pension you receive from this annuity is treated as regular income and is fully taxable according to your applicable income tax slab in retirement.