national pension system — 60/40 split at retirement. corpus + monthly pension modelled.
your contribution
default 60 · can extend to 75
min ₹500/month · ₹6,000/year
75% equity · historical avg 10-12%
for tax-saving calc
typical insurer quote 5.5-7%
mandatory ≥40% to annuity · max 60% lump
corpus at retirement
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💰 lump-sum withdrawal
tax-free · take at 60
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% of corpus—
tax treatmentfully tax-free
useat your discretion
🏦 annuity purchase
mandatory · monthly pension
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annuity corpus—
annual pension—
taxed atregular slab
total over ${25} years—
tax savings · over contribution years
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corpus growth · every year till retirement
corpus · compounds at ${'pre-retire'}%your contribution (non-compounded)
tl;dr · is NPS right for you?
✓ good if: you want low-cost equity+debt exposure for retirement (0.09% fund management fee · cheapest in india), you're ok with the 60/40 rigidity, and you want the extra ₹50K 80CCD(1B) deduction beyond your 80C limit.
× not ideal if: you want flexibility (ELSS has 3-year lock-in, PPF has tax-free returns, NPS has 40% annuity lock forever), or you're in the new tax regime (no 80CCD(1B) benefit there).
rule of thumb: NPS is a retirement vehicle, not a tax shield. use the ₹50K deduction, treat it as forced savings, don't expect miracles.
assumes tier 1 account with auto-choice life-cycle fund · equity allocation starts at 75% (for age ≤ 35), tapers down by age 55 to 15%. this calc uses a flat average return for simplicity. annuity rate depends on insurer and variant (return of purchase price, joint life, etc). see /ppf for PPF vs NPS vs ELSS side-by-side.