National Pension Scheme (NPS) Calculator

About National Pension Scheme (NPS)

The National Pension Scheme (NPS) is a government-sponsored pension scheme launched in January 2004 for government employees. It was extended to all citizens of India in 2009. The scheme allows subscribers to contribute regularly in a pension account during their working life.

NPS aims to provide old age income with market-based returns over the long term. It encourages people to invest in a pension account at regular intervals during their employment. After retirement, subscribers can take out a part of the corpus in a lump sum and use the remaining corpus to buy an annuity to secure a regular income after retirement.

key benefits of the NPS

Retirement Planning

1. Regular Income Post-Retirement: NPS provides a regular source of income after retirement by allowing subscribers to accumulate a pension corpus during their working life.
2. Annuity Purchase: On retirement, a portion of the corpus can be used to purchase an annuity, ensuring a steady stream of income.

Tax Benefits

1. Section 80C: Contributions up to ₹1.5 lakh per year are eligible for tax deduction under Section 80C of the Income Tax Act.
2. Section 80CCD(1B): An additional deduction of ₹50,000 is available under Section 80CCD(1B) over and above the limit of Section 80C.
3. Section 10(10A): The lump sum withdrawal on retirement is partially tax-exempt.

Flexibility

1. Contribution Amount: Subscribers can choose how much and how often they contribute, providing flexibility based on their financial situation.
2. Investment Options: Subscribers have the flexibility to choose their investment mix and fund managers, allowing them to tailor their portfolio according to their risk tolerance and financial goals.

Transparency and Regulation

The Pension Fund Regulatory and Development Authority (PFRDA) oversees NPS, ensuring transparency, accountability, and regular monitoring.

Partial Withdrawals

Subscribers can make partial withdrawals (up to 25% of contributions) after three years for specific purposes like higher education, marriage, buying/building a house, or for medical treatment of critical illnesses.

Attractive to Both Salaried and Self-Employed Individuals

NPS is designed to cater to both salaried employees and self-employed individuals, providing retirement benefits to a wide range of the population.