NPS Calculator

National Pension System (NPS) is a government initiative that helps you secure your financial future after retirement. If your age is between 18 and 60 years, you can start building a pension corpus by regularly contributing to your NPS account throughout your working years. Once you turn 60, you can access the accumulated funds, giving you financial stability during retirement. 

For those working in private jobs where long-term security might be uncertain, this scheme offers a reliable way to ensure you have a steady income post retirement. By using the Kotak811 NPS calculator, you can easily estimate how much your contributions will grow over time, helping you plan for the future.  

What is an NPS calculator? 

The National Pension Scheme calculator is a free, online tool designed to help you estimate the total corpus you can accumulate and the pension you will receive upon retirement. It shows the breakdown of the amount you can withdraw as a lump sum and the part reserved for purchasing an annuity. This provides you with a regular monthly pension. 

How does an NPS calculator work? 

NPS returns are calculated using compound interest. The formula for this is: 

M = P (1 + r/n) ^ n x t 

P = Total contribution  

R = Rate of interest 

n = Number of times the interest is compounded 

t = Total number of years 

Example  

Let us consider an example of a woman who is 30 years old, contributing ₹5,000 monthly to her NPS account. She plans to continue contributing until the age of 60, giving her a 30-year investment period. 

Monthly contribution: ₹5,000 

Total contribution period: 30 years 

Expected rate of interest (ROI): 9% per annum  

Here’s how her pension corpus would look by the time she retires: 

Total principal invested: ₹18 lakhs (₹5,000 x 12 months x 30 years) 

Interest earned: ₹73.53 lakhs (assuming 9% annual returns) 

Maturity amount: ₹91.53 lakhs 

Min. annuity investment: ₹36.61 lakhs 

Lump sum value: ₹54.92 lakhs 

With this annuity, she could claim this amount on retirement.  

How to use the Kotak811 NPS calculator  

Here is a simple guide to using Kotak811 NPS calculator: 

1. Add the monthly amount you want to invest in the pension scheme.  
2. Enter your current age. 
3. Finally, add the expected rate of return. 

The results will show the details of the total amount of principal, interest earned, maturity, lump sum value and minimum annuity investment.   

Benefits of a National Pension Calculator  

• It helps estimate your retirement savings, making planning easier. 
• No need for manual calculations; the tool simplifies the process.  
• Adjust contributions or returns to tailor your savings plan. 
• Can compare investment options like aggressive or conservative portfolios. 
• Clearly shows how your corpus is split between lump sum and annuity​. 

FAQs 

1. Is NPS tax-free? 

National Pension System (NPS) offers tax benefits, but it isn’t fully tax-free: 

• Contributions: You can claim tax deductions of up to ₹2 lakh annually (₹1.5 lakh under Section 80CCD (1) and an additional ₹50,000 under Section 80CCD(1B))​. 
• Employer contributions: You can claim extra deductions on employer contributions up to 10% of your salary (Basic + DA) under Section 80CCD (2), without affecting the ₹1.5 lakh limit​.  
• Retirement withdrawals: 60% of the corpus is tax-free upon retirement. The remaining 40% used for an annuity is tax-exempt, but the annuity income is taxable. 

2. What are the types of NPS accounts? 

There are two types of NPS accounts you can open: 

Tier-I Account 

This is the primary, mandatory retirement account. It is designed for long-term savings with a lock-in period until the age of 60. You cannot withdraw the money before retirement, except for specific cases like medical emergencies or education. Contributions to Tier-I are eligible for tax deductions under Sections 80C and 80CCD, up to ₹2 lakh annually.  

Tier-II Account 

This is a voluntary savings account that you can open only if you have an active Tier-I account. It offers more flexibility, allowing you to deposit and withdraw funds anytime without restrictions. However, Tier-II accounts do not provide tax benefits. 

3. Do the pension maturity values vary between tier-1 and tier-2 cities? 

No, the pension maturity values under the National Pension System (NPS) do not vary based on whether you live in a Tier-1 or Tier-2 city. It is solely determined by factors like your contributions, the duration of investment and the returns generated from the underlying asset classes​.