Free National Pension System / NPS Calculator by Nivesguru

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Rate of interest : 9%

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Introduction : National Pension System

The National Pension System (NPS) is a government-backed retirement savings scheme in India. It is a voluntary scheme that allows individuals to save for their retirement and receive a regular income after they retire. A National Pension Scheme investment calculator is a tool that can help investors estimate the amount of money they can save under the scheme and plan their finances accordingly. is a tool that can help investors estimate the returns on their PPF investments and plan their finances accordingly.

In today's fast-paced world, securing your financial future is more critical than ever. The National Pension System (NPS) is a versatile retirement savings scheme that has gained immense popularity in India. Whether you're a government employee or a private sector worker, NPS offers a systematic and efficient way to plan for your retirement.

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List of Institutions / Banks Supporting NPS

You can open an NPS account with authorized institutions and banks. Some of the prominent ones include:

Supporting Institutions / Banks
State Bank of India (SBI)
ICICI Bank
HDFC Bank
Axis Bank
Kotak Mahindra Bank
LIC Housing Finance
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Understanding NPS: How It Works

Benefits of NPS : NPS provides a retirement corpus that can be used to secure your financial future. It offers flexibility, choice of investments, and portability.

Investment Value Calculation : Your NPS investment value depends on the contributions made, the performance of the chosen investment funds, and the duration of the investment.

Current Yearly Interest Rate : The NPS interest rate varies based on the performance of your chosen investment funds. It is not fixed and can fluctuate.

Corpus and Maturity Value : Your NPS corpus is the total amount accumulated in your account over time. At maturity, you can withdraw a portion of it as a lump sum, and the rest is used to purchase an annuity.

Maturity Period and Duration : NPS has a lock-in period, and withdrawals are allowed only after the age of 60, ensuring that the funds are used for retirement.

Age Limit for NPS : NPS can be opened by individuals aged between 18 and 65 years, making it accessible to a wide range of people.

Required Documents and Eligibility

To open an NPS account, you will need the following documents:

  • Passport-sized photographs
  • Proof of identity (Aadhaar card, passport, PAN card, etc.)
  • Proof of address (passport, utility bill, bank statement, etc.)
  • Proof of date of birth (birth certificate, school certificate, passport, etc.)

Eligibility criteria include:

  • Being a resident of India
  • Age between 18 and 65 years
  • Not having another NPS account

What is NPS (National Pension System)?

National Pension System (NPS) is a voluntary, long-term retirement savings scheme established by the Government of India. It is designed to provide financial security during retirement. NPS allows individuals to contribute regularly to their retirement account, which is then invested in various financial instruments to generate returns over time.

The main objectives of NPS are to:

  • Provide an opportunity for regular savings for retirement.
  • Generate reasonable returns over the long term.
  • Create a pension corpus that can be used to purchase an annuity at retirement.

NPS Scheme Explained

The NPS scheme offers flexibility in terms of investment options. Subscribers can choose from the following:

Equity Fund :
Invests primarily in equities and offers the potential for higher returns.

Corporate Bond Fund :
Invests in fixed-income securities issued by corporates.

Government Securities Fund :
Invests in government bonds and securities, offering a relatively low-risk option.

Alternative Investment Fund :
Invests in alternative assets like real estate and infrastructure.

You can switch between these funds during your investment journey, allowing you to adapt your portfolio to changing financial goals and market conditions.

NPS also offers the option of selecting your preferred fund manager, who will manage your investments based on your chosen investment plan and risk profile.

How to Open an NPS Account

Opening an NPS account is a straightforward process. Here's a step-by-step guide to help you get started:

Choose Your NPS Account Type - NPS offers two account types: Tier 1 and Tier 2. Tier 1 is mandatory for all NPS subscribers, while Tier 2 is optional and allows for more flexible withdrawals.

Choose Your NPS Fund Manager and Investment Plan - You can select from various fund managers and investment plans based on your risk tolerance and financial goals.

Provide Required Documents - You will need to submit documents such as proof of identity, address, and date of birth, along with a recent photograph.

Fill Out the NPS Registration Form - Fill out the NPS registration form, which can be obtained from authorized service providers or online.

Make Your Initial Contribution - Make the initial contribution to your NPS account, which can vary based on your chosen fund manager and plan.

Receive Your PRAN (Permanent Retirement Account Number) - Once your account is set up, you will receive a PRAN, which is a unique identification number for your NPS account.

Investing in NPS

To invest in NPS, you need to make regular contributions to your account. Here's how it works:

Contribution Amount :
The minimum contribution amount for Tier 1 NPS accounts is Rs. 500 per month or Rs. 6,000 per year. For Tier 2 accounts, it varies based on the fund manager.

Choosing an Investment Plan :
Select the investment plan that suits your risk tolerance and financial goals. You can change your investment plan and fund manager if needed.

NPS for Government Employees :
Government employees enjoy certain benefits under NPS, such as a mandatory contribution from their salary, making it a popular choice among this group.

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Managing Your NPS Account

Checking NPS Balance : You can check your NPS balance online through the official NPS website or by contacting your service provider.

Making Payments (Online and Offline) : NPS contributions can be made online through the NPS website or offline at designated service points.

Closure Rules : NPS accounts can be closed under certain circumstances, such as when reaching the age of 60 or upon the death of the subscriber.

Withdrawal Rules : NPS allows partial withdrawals under specific conditions, such as for education, marriage, or medical emergencies. However, a significant portion must be used for annuity purchase at retirement.

Disclaimer : This article provides general information about the National Pension System and Sukanya Samriddhi Yojana. Please consult a financial advisor or visit the official websites of NPS and SSY for specific details and updates.

How National Pension System (NPS) Calculator Work?

A National Pension System investment calculator is a simple tool that takes into account two main inputs: the amount of money invested and the expected rate of return. Based on these inputs, the calculator estimates the total amount of money that can be saved by the end of the investment period. To calculate the total amount of money saved in an NPS account, the calculator uses a formula that takes into account the investment amount, the expected rate of return, and the investment period.

Why Use a National Pension System (NPS) Calculator?

Estimating the Total Amount of Money Saved : By using a National Pension System investment calculator, investors can estimate the total amount of money they can save over the course of their investment.

Understanding the Impact of Expected Rate of Return : The expected rate of return can have a significant impact on the amount of money earned in an NPS account. By using a National Pension Scheme investment calculator, investors can determine the impact of different expected rates of return on their savings.

Planning for Retirement : By using a National Pension System investment calculator, investors can plan for their retirement and ensure that they have sufficient funds available to support their lifestyle after they retire.

Choosing the Right Investment Option : The National Pension System offers different investment options that investors can choose from. By using a National Pension System investment calculator, investors can compare the returns offered by different investment options and choose the one that best fits their financial goals.

Taking Advantage of Tax Benefits : The National Pension System offers tax benefits under Section 80C and Section 80CCD(1B) of the Income Tax Act, which allows investors to claim deductions on the amount invested in the scheme. By using a National Pension System investment calculator, investors can ensure that they take full advantage of these tax benefits.

The maturity amount of a National Pension System investment is calculated using the following formula :

M = P x ((1 + r/100)^n - 1) / (1 - (1 + r/100)^-12)
Where:
A = maturity amount
P = principal amount (investment amount)
r = interest rate (in decimal)
n = compounding frequency (annually, semi-annually, quarterly, or monthly)
t = tenure of the investment (in years)

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Tax Benifits of NPS / National Pension System

NPS offers attractive tax benefits to encourage retirement savings:

Section 80CCD Deductions : You can claim deductions under Section 80CCD of the Income Tax Act for contributions made to your NPS account, up to a specified limit.

Exempt-Exempt-Tax (EET) Regime : While contributions and returns are tax-exempt, withdrawals are taxable. However, you can use a portion of your corpus to purchase an annuity, which provides regular income and is also subject to taxation.

Huge tax benifits can be availed by any Indian citizen on Income Tax deduction with NPS / National Pension System. Upto ₹2 lakh through u/s 80CCD (1), 80CCD (2) and 80CCD (1B) who have subscribed for NPS / National Pension System. In 80CCD (1) a subscriber can claim maximum deduction upto of ₹1.5 lakh in a financial year. Through u/s 80CCD (1B) can also save extra ₹50,000 on you Income Tax also you can claim 10% exemption on you Basic Salary behalf of the u/s 80CCD (2). Also in NPS you can enjoy maturity amount without any Income Tax deduction, it's fully exempted Income Tax Act. 1961. But after retirement the annuity amount you'll receive comes under the Income Tax brackets.

Conclusion

A National Pension System investment calculator is a useful tool for investors looking to save for their retirement. By using a National Pension System investment calculator, investors can estimate the amount of money they can save, make informed decisions about their investments, and plan for their retirement. Whether you're an investor looking to save for your retirement or someone interested in investing in NPS, a National Pension System investment calculator can help you achieve your financial goals. So if you're ready to start investing in your retirement, start using a National Pension System investment calculator today!

The National Pension System (NPS) is a powerful tool for securing your financial future and achieving your retirement goals. Whether you're a government employee or a private sector worker, NPS offers flexibility, tax benefits, and a range of investment options to suit your needs. Remember, NPS is a long-term commitment, and the earlier you start, the greater your retirement corpus will be. So, take the first step towards securing your future and open your NPS account today. Your retirement dreams are within reach, thanks to the National Pension System.

FAQ - Frequently asked questions

Can I exit from NPS before 60 years?

You can voluntarily exit from NPS before attaining the age of 60 years or superannuation. Annuitization - Minimum of 80% of accumulated pension wealth will be utilized for monthly annuity or pension.

What is the locking period for NPS?

What is the lock-in period for NPS? The investments you make in NPS are locked in until the age of 60. And when you reach the age of 60, you can withdraw a maximum of 60% of your corpus. The remaining 40% must be used to purchase an annuity.

What happens to NPS if I stop working?

If contribution is discontinued and the subscriber wishes to exit from NPS before attaining the age of 60, he/she can withdraw upto 20% of the sum accumulated till that point of time. The subscriber has to buy annuity with the rest of the money from PFRDA empanelled Annuity Service Providers.