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The National Pension System is a voluntary, market-linked retirement scheme regulated by the PFRDA. You contribute during your working years, the money is invested across equity and debt, and it grows into a corpus you draw on after 60, partly as a lump sum and partly as a lifelong pension.

It uses the future value of a monthly investment. Each contribution earns a monthly return and compounds until you retire. The formula is Corpus = M x [ ((1 + i)^n - 1) / i ] x (1 + i), where M is your monthly contribution, i is the expected return divided by 12, and n is the number of months until retirement. Small differences from other calculators come down to whether contributions are counted at the start or end of the month, and to rounding.

At retirement a share of your corpus, at least 40%, is used to buy an annuity from an insurer. The pension is that annuity amount times the annuity rate, divided by twelve for a monthly figure. So a ₹50 lakh annuity at 6% pays roughly ₹25,000 a month. The actual rate depends on the annuity option and the provider you pick at the time.

NPS rules require you to convert at least 40% of your corpus into an annuity at 60, so you have an income for life rather than spending the whole pot at once. You can choose to annuitise more, up to 100%. The rest, up to 60%, is yours to withdraw as a tax-free lump sum.

NPS returns are not guaranteed because the money is invested in markets. Over the long run, diversified NPS accounts have often returned somewhere around 9% to 11% a year, with equity-heavy choices swinging more. Use a figure you are comfortable with, and try a lower one too so you can see the downside as well as the upside.

It is the yearly rate the insurer pays on the annuity you buy with your corpus. It depends on interest rates, your age and the annuity option, for example pension for life, or pension with return of purchase price. It has typically sat in the region of 6% to 7%, but you should check live rates when you retire.

Your contribution qualifies for a deduction of up to ₹1.5 lakh under Section 80CCD(1), within the overall 80C limit, plus an extra ₹50,000 under Section 80CCD(1B) that is unique to NPS. Your employer’s contribution is deductible separately under 80CCD(2). These apply under the old tax regime, and the 80CCD(2) employer benefit is also available under the new regime.

The lump sum you withdraw at 60, up to 60% of the corpus, is tax-free under Section 10(12A). The remaining 40% or more that buys the annuity is not taxed at the point of purchase, but the monthly pension it pays is added to your income and taxed at your slab in the years you receive it.

Yes. NPS is flexible: you can raise, lower or pause contributions across the years, subject to a small yearly minimum. Partial withdrawals are allowed for specific needs after a few years. If you exit before 60, the rules are stricter, and you generally have to use at least 80% of the corpus to buy an annuity.

Treat it as a planning scenario, not a promise. It assumes a steady contribution and a constant return every month, which real markets never deliver. It also cannot know the annuity rate you will actually get decades from now. Use it to compare choices and see how contribution, time and return move the outcome, then revisit it as your real numbers change.

Yes on both. It is completely free, there is no sign-up, and the whole thing runs in your browser. Nothing you type is sent anywhere or stored, so your figures stay on your own device.