NPS Explained: Contributions, Retirement Corpus and Annuity

NPS builds an individual retirement corpus from contributions and investment outcomes

The National Pension System is a defined-contribution retirement arrangement regulated by the Pension Fund Regulatory and Development Authority. Contributions are invested under the choices recorded for the account, so the eventual corpus depends on contributions, investment performance, charges and other account activity rather than a promised return.

ArthaSiddhi's calculator is narrower. It projects one entered current corpus and a monthly contribution using a constant assumed return and an optional annual contribution increase. It does not reproduce an NPS account, fund history or statement.

The projection starts with age, corpus and contribution assumptions

• Current age and retirement age set a whole-year projection period.
• Current NPS corpus is the opening balance used by the model.
• Monthly contribution is added at the beginning of each modeled month.
• Expected annual return is a constant illustrative input, converted to a monthly rate by the engine.
• Annual contribution increase steps the monthly amount up after each completed 12-month block.

Illustrative projection from age 40 to 60

This example starts with ₹5,00,000, adds ₹10,000 at the beginning of every month for 20 years and uses an illustrative constant 8% annual return with no contribution increase. The 20% calculator allocation and 6% annuity-rate input demonstrate arithmetic only; they do not decide the rules applicable at exit or quote an annuity product.

Calculator allocation and actual NPS exit rules are separate

The calculator mechanically splits the projected corpus using the entered annuity allocation. Selecting a percentage is a projection control; it is not a finding that a subscriber is entitled or required to withdraw or annuitize that percentage.

Actual treatment depends on the subscriber category, exit event, vesting conditions, accumulated pension wealth, exceptions and regulations applicable at exit. Current PFRDA material distinguishes normal and premature exits and includes corpus-based options, so no single split should be presented as universal.

Read the calculator arithmetic and current-rule boundary in NPS Lump Sum and Annuity.

Read contributions, growth and pension estimates separately

Total contributions follow the modeled payment schedule. Estimated growth depends on the return assumption. Their sum with the starting corpus produces the projected retirement corpus.

The monthly annuity estimate then applies the entered assumed annuity rate to the allocated annuity corpus and divides the annual estimate by 12. It is not an insurer or annuity service provider quote, a guaranteed pension, or a tax calculation.

See exactly how the corpus projection is calculated and review why calculator results differ from actual pension outcomes.