NPS Pension Calculator — and How It Compares to UPS
Project your National Pension System corpus at retirement, the 40% annuity rule, the tax-free 60% lump sum and the monthly pension that results — then set it against the assured payout the Unified Pension Scheme would give you for the same career.
NPS inputs
30 years of contributions
Government employees: 10% of basic + DA from you, 14% from the employer.
Your contribution rises with every increment and DA revision.
40% is the statutory minimum.
Insurers currently quote roughly 6% to 7% for a lifetime annuity.
UPS comparison
25 years gets the full 50%. Below that it is pro-rated.
NPS monthly pension at 60
₹77,849
From a ₹3,59,30,210 corpus, 40% annuitised at 6.5%
Corpus at retirement
₹3,59,30,210
You contribute
₹79,72,662
Market growth
₹2,79,57,549
Tax-free lump sum
₹2,15,58,126
Annuity corpus
₹1,43,72,084
Annual pension
₹9,34,185
NPS vs UPS side by side
UPS pays an assured amount linked to your final basic. NPS pays whatever your corpus buys. Dearness Relief applies to the UPS figure, which is the part that protects it from inflation.
NPS — market linked
₹77,849
per month, for life
- + ₹2,15,58,126 tax-free lump sum
- + Upside if markets do well
- − No inflation protection after purchase
- − Pension taxed at your slab rate
UPS — assured payout
₹75,000
plus Dearness Relief → ₹1,20,000 today
- + Guaranteed, government-backed
- + DR revised twice a year with inflation
- + 60% family pension on death
- − No market upside, smaller lump sum
Corpus growth to age 60
| Age | Invested | Corpus |
|---|---|---|
| 31 | ₹1,20,000 | ₹1,26,703 |
| 33 | ₹3,78,300 | ₹4,41,286 |
| 35 | ₹6,63,076 | ₹8,54,582 |
| 37 | ₹9,77,041 | ₹13,91,360 |
| 39 | ₹13,23,188 | ₹20,82,153 |
| 41 | ₹17,04,814 | ₹29,64,566 |
| 43 | ₹21,25,558 | ₹40,84,866 |
| 45 | ₹25,89,428 | ₹54,99,931 |
| 47 | ₹31,00,844 | ₹72,79,630 |
| 49 | ₹36,64,680 | ₹95,09,735 |
| 51 | ₹42,86,310 | ₹1,22,95,473 |
| 53 | ₹49,71,657 | ₹1,57,65,874 |
| 55 | ₹57,27,252 | ₹2,00,79,082 |
| 57 | ₹65,60,295 | ₹2,54,28,832 |
| 59 | ₹74,78,725 | ₹3,20,52,381 |
| 60 | ₹79,72,662 | ₹3,59,30,210 |
Pension at different annuity rates
| Annuity rate | Monthly pension | Annual |
|---|---|---|
| 5% | ₹59,884 | ₹7,18,604 |
| 5.5% | ₹65,872 | ₹7,90,465 |
| 6% | ₹71,860 | ₹8,62,325 |
| 6.5% | ₹77,849 | ₹9,34,185 |
| 7% | ₹83,837 | ₹10,06,046 |
| 7.5% | ₹89,826 | ₹10,77,906 |
How NPS actually pays out
At 60 your corpus splits in two. At least 40% must be used to buy an annuity from a PFRDA-empanelled life insurer, which pays you a fixed monthly amount for life. The remaining up to 60% can be withdrawn as a lump sum, entirely tax-free.
On your inputs that is ₹2,15,58,126 in hand and ₹77,849 a month for life. The lump sum is yours to deploy — many retirees run an SWP on it rather than annuitising more, because an SWP keeps the capital and is taxed more lightly than annuity income.
The annuity trap nobody mentions
An annuity is not inflation-indexed. ₹77,849 a month looks adequate on the day you retire; at 6% inflation it buys what ₹32,484 buys today, fifteen years in. A 30-year retirement halves its real value twice over.
This is the central argument for UPS among government employees: the assured payout carries Dearness Relief, which is revised twice a year against the AICPI-IW index. An NPS annuity never rises.
NPS vs UPS — how to actually decide
- More than 25 years to retirement: NPS usually wins on expected value. Equity compounding over that long typically produces a corpus whose annuity exceeds 50% of final basic — but you carry the risk.
- Within 10 years of retirement: UPS is usually safer. There is not enough time for equity to recover from a bad decade, and the assured payout with DR removes the single biggest unknown in retirement planning.
- Long qualifying service: UPS is designed to reward 25+ years. Below that the payout is pro-rated, which erodes its advantage.
- You value certainty: take UPS and stop optimising. A guaranteed inflation-linked pension has a real psychological value that spreadsheets do not capture.
Tax deductions available on NPS
- 80CCD(1) — your own contribution, up to 10% of salary, inside the overall ₹1.5 lakh 80C ceiling. Old regime only.
- 80CCD(1B) — an extra ₹50,000 on top of 80C. Old regime only. This is the only deduction that genuinely sits above the ₹1.5 lakh cap.
- 80CCD(2) — employer contribution, up to 14% of salary. Available under both regimes, which makes it the most valuable NPS benefit for anyone who has moved to the new regime.
If you are on the new tax regime, 80CCD(2) is effectively the only NPS tax break left — which is a strong argument for restructuring salary so a larger share flows through employer NPS contribution.
Frequently asked questions
Short, specific answers — no sign-up, no sales pitch.
How much pension will I get from NPS?
Your pension depends on the corpus at 60 and the annuity rate at that time. At least 40% of the corpus must buy an annuity; the remaining 60% can be withdrawn tax-free. At a 6.5% annuity rate, a ₹1 crore corpus with a 40% annuity share yields about ₹21,667 a month for life.
What is the difference between NPS and UPS?
NPS is defined-contribution: your pension is whatever your corpus buys, with market risk on you. UPS is defined-benefit: it assures 50% of the average basic pay of your last 12 months for 25+ years of qualifying service, with Dearness Relief on top, and the government carries the risk. UPS gives certainty, NPS gives upside.
Which is better, NPS or UPS?
UPS suits employees close to retirement, those with long qualifying service, and anyone who values a guaranteed inflation-linked payout. NPS suits younger employees with 25+ years to go, because equity compounding over that long usually beats an assured 50% of final basic — but only if you can tolerate the uncertainty.
Is NPS maturity taxable?
The 60% lump sum withdrawn at 60 is entirely tax-free. The 40% used to buy an annuity is not taxed at purchase, but the monthly pension it pays is taxed at your slab rate as income in each year you receive it.
How much tax does NPS save?
Under the old regime: ₹1.5 lakh under 80CCD(1) within the overall 80C limit, plus an extra ₹50,000 under 80CCD(1B). Under both regimes, the employer contribution under 80CCD(2) is deductible — up to 14% of salary for government employees and 14% for private employees under the new regime.
Can I withdraw from NPS before 60?
Partial withdrawal of up to 25% of your own contributions is allowed after three years, for specified reasons such as higher education, marriage, home purchase or critical illness, a maximum of three times. Full exit before 60 requires 80% of the corpus to buy an annuity, so early exit is deliberately unattractive.
What return does NPS actually give?
It depends on your asset allocation. Equity (Scheme E) has historically returned 11-13%, corporate bonds (Scheme C) 8-9% and government securities (Scheme G) 7-8%. An aggressive life-cycle fund starting at 75% equity typically models to about 10% blended.
Related free calculators
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Gratuity Calculator
The other lump sum you receive at retirement.
SWP Calculator
An alternative to an annuity for the 60% lump sum.
PPF Calculator
Tax-free 7.1% with a much shorter lock-in.
Goal SIP Planner
Build the gap between pension and expenses.
Income Tax Calculator
The 80CCD(1B) deduction in context.
Retirement Planning
Sizing the corpus you actually need.
In-Hand Salary Guide
The 10% and 14% that leave your payslip every month.
In-Hand Salary Calculator
The 10% and 14% as they appear on your payslip.
Projections only. Actual NPS returns depend on scheme performance and annuity rates quoted at the time of purchase. Not investment advice.