NPS Calculator: Uses and Benefits

National Pension System, or NPS as it is generally known is a government-sponsored scheme. Under this scheme, the amount the individual receives in the future depends on the amount accumulated at the time of maturity. It was started to develop financial stability for citizens after their retirement. Any citizen between the age of 18 to 60 is eligible to invest in this scheme and reap its benefits in old age. Since this scheme is not one of the market-linked instruments, it beards sound returns and stands as one of the preferred investment for the individuals working in the private sector.

What is an NPS calculator

An NPS calculator is a carefully designed tool that helps the investors estimate the wealth gained, maturity amount of their investments, and the monthly pension they would receive. The maturity amount is based on the investments made during the investment period. Higher the accumulated amount, the more the benefit in the future. This calculator helps in estimating the amount that shall be invested to achieve the financial goals. One feature that makes NPS an attractive retirement plan is the power of compounding. The investor only needs to enter his monthly or annual investment amount, his age, and his withdrawal %.

calculator and pen laying on top of a printed out spreadsheet

The calculator gives the estimate of monthly pension and the wealth gained. However, it must be noted that these are just estimates and not actual values. The actual return varies due to the allocation to equities and underlying assets’ performance. Also, users must decide whether they will be investing monthly or in a lump sum and the amount they want to withdraw on retirement.


If you are an individual who wants to invest INR 50000 annually in the scheme, it is advisable to explore the NPS investment. To know the wealth that can be accumulated through NPS, you must use the National Pension System calculator. First, you must decide the type of investment you want to make i.e. monthly or yearly, and the amount you want to withdraw on retirement or maturity.

Suppose, you invest yearly, your current age is 30 years, and the withdrawal percentage is 40%. The results that the calculator will show are:

Monthly pension: Rs 34,617

Wealth Gained: Rs 39,56,181

Withdrawal (on Retirement): Rs 98,90,453

Formula to calculate National Pension System Amounts

To understand the formula, let’s take another example:

An individual named Ravi subscribes to NPS. His age at the time of initiating the subscription is 25 years.

He invests a monthly amount of INR 10000

His retirement age is 60 years and invests for 35 years I.e 60 years minus 25 years

Let the expected return on investments be 10% and purchase of the annuity be 50%

Also, let the rate of return on an annuity stand at 7% and annuity period be that of 10 years

Once Ravi enters the above details, the NPS calculator will provide him with the relevant output.


Principal amount invested = Rs 4,080,000

Interest earned computed on monthly compounding basis = Rs 30,459,348

Pension wealth generated = INR 34,539,348

Amount re-invested in annuity = INR 17,269,674

Amount that is withdrawn in lump sum = INR 17,269,674

Monthly pension post-retirement = INR 200,514

Who can use the NPS calculator

woman using spreadsheet on laptop along with a claculator

The National Pension System (NPS) calculator can be used by all the individuals who invest in this scheme. The individuals who are between the age of 18 and 60 years of age can invest in this system. Such individuals, however, need to comply with the KYC norms to start investing.

How to use the NPS calculator

The investors in the NPS should fill the following details to see the corpus accumulated:

1. Current age and the retirement age

2. Amount to be invested monthly

3. Expected returns from the investment

4. Years for which pension is to be received

5. Percentage of accumulated corpus to be used to buy the pension plan. This % should not be below 40% if the withdrawal is done at 60 years or above and it must be below 80% if withdrawal is done before 60 years

6. Expected interest rate on the annuity

With all the above inputs, the user gets the accumulated corpus by the retirement time. This corpus is calculated by the principle of the power of compounding. It also shows the interest earned, pension to be received, amount to be re-invested, and the lump sum withdrawn.

Advantages of using the NPS calculator

The National Pension System calculator provides several benefits to the users. Some of these advantages are:

1. There is no need for complex calculations. The online calculator gives the right result with the user just inputting a few details

2. The users can determine how much pension will be available. This aids in their future planning

3. It provides one-stop online calculation

Additionally you can always use a concavity calculator.


Both, National Pension System and Public Provident Fund have their features and benefits. NPF is a market-driven instrument. However, PPF is independent of the market situation. Therefore, the decision between which investment to choose largely depends on the financial objective of the investor.

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Eddie N S
Technology freak. Life traveler. Living one day at a time…Life is good.