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NPS Annuity & Pension Calculator

What an NPS corpus produces as a pension, and what the lump sum you keep could produce alongside. The annuity rate is an insurer quote rather than a market return, and it is always the lower of the two.

Also called: nps pension calculator, annuity calculator.

₹
%
%
%
Monthly pension
₹20,000

₹20,000 a month from the ₹40,00,000 you must annuitise. The remaining ₹60,00,000 stays yours, and at 8% it would add ₹40,000 a month without touching the capital.

Amount annuitised
₹40,00,000
Lump sum you keep
₹60,00,000
Annual pension
₹2,40,000
Monthly income from the lump sum
₹40,000
Combined monthly income
₹60,000
Years for the pension to return the annuitised capital
16.67
How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for India change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

A minimum share of the corpus has to buy an annuity; the rest can be withdrawn. The annuity pays a rate set by the insurer, which is below what the same money might earn invested, because the insurer is carrying the risk that you live longer than expected. That is not a bad deal by itself, it is the price of a guaranteed income for life. Showing both alongside makes the trade visible: the annuity is insurance, and the lump sum is capital you still control.

monthly pension = annuitised amount * annuity rate / 12
C
Corpus at retirement (currency)
s
Share annuitised (decimal)
r_a
Annuity rate (decimal)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a crore at the minimum annuitisation

Corpus at retirement
₹1,00,00,000
Share you must annuitise
40%
Annuity rate offered
6%
Return on the lump sum you keep
8%

Monthly pension₹20,000

40 lakh at 6% is 2,40,000 a year, worked by hand

Open this example

annuitising everything

Corpus at retirement
₹1,00,00,000
Share you must annuitise
100%
Annuity rate offered
6%
Return on the lump sum you keep
8%

Monthly pension₹50,000

boundary

Open this example

annuitising nothing leaves the whole corpus

Corpus at retirement
₹1,00,00,000
Share you must annuitise
0%
Annuity rate offered
6%
Return on the lump sum you keep
8%

Monthly pension₹0

degenerate case

Open this example

Method and limits

What it assumes

  • A level annuity with no escalation and no return of purchase price, which pays the highest rate.
  • The lump sum earns its return indefinitely without drawdown.

What it deliberately does not model

  • Annuity variants that return the purchase price or pay a spouse pay materially less and are not modelled.
  • Inflation is not applied, so a level pension loses purchasing power every year it runs.

Sources

Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator

Frequently asked questions

Why is the annuity rate lower than what I could earn investing?
Because it is guaranteed for life. The insurer takes the longevity risk, and the gap between the two rates is what that insurance costs.
Should I annuitise more than the minimum?
Only if you value the guarantee more than the flexibility. A level annuity also loses to inflation every year, so annuitising everything at 60 is rarely the right answer.