Now you can know in advance the return on NPS by using a NPS Calculator

NPS calculator

NPS calculator is an online tool offered by various banks that helps you to estimate the amount of pension and the lump sum amount that you will get when you retire at the age of 60 years. This helps you to decide the monthly contribution to be paid so that your future needs are fulfilled. The more invested money, the more the accumulated amount and the larger would be the eventual benefits of the accumulated pension wealth. Let’s take an example to understand the NPS calculator more clearly.

Example: Let’s say Mr A is 30 years old at present and he plans to retire at the age of 60 years. He is planning to invest in NPS, so according to his current age and retirement age, he will have 30 years of investing period. If he decides to invest Rs.5000 every month at an expected rate of return of 8% p.a. compounded monthly then following are the things that the calculator calculates:

  • Interest earned on the investment
  • Total tax savings
  • Pension wealth generated

The NPS calculator also gives information about the pension amount that one will receive every month and the lump sum withdrawal, based on the percentage you chose. Though the minimum percentage of accumulated pension wealth that needs to be utilized for purchase of annuities is 40%. But you can choose a greater percentage also and the amount of withdrawal depends on this. In the example, Mr. A has decided that 45% of his pension wealth should be reinvested in the Annuity plan.

Pragati Rajoria

Pragati Rajoria

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About Me

I’m a Commerce Graduate & CFP Professional, engaged in blogging since 3 years. I’m not affiliated with any financial product. The purpose of writing blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

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