What is the 60-40 split at maturity?

At age 60, NPS rules require that a MINIMUM of 40% of the accumulated corpus be used to purchase an annuity from a PFRDA-empanelled life insurer. The annuity provides a monthly pension for life. The remaining (up to 60%) may be withdrawn as a single tax-free lumpsum. Subscribers may choose to annuitize more than 40% — for example, allocating 60% to annuity for a higher pension and withdrawing the remaining 40% as lumpsum.

Can I exit NPS before age 60?

Yes — premature exit from NPS is allowed but with significant restrictions. If you exit before age 60, only 20% of the corpus may be withdrawn as lumpsum and 80% MUST be used to purchase an annuity (compared to the 60-40 ratio at age 60). Full corpus withdrawal without buying an annuity is permitted only if the total corpus is less than ₹2.5 lakh, or if exiting after age 60 with a corpus less than ₹5 lakh. Partial withdrawal (up to 25% of own contributions) is also allowed for specific reasons like higher education, marriage, home purchase, or critical illness after 3 years.

How is the monthly pension calculated?

The monthly pension is calculated from the annuity corpus and the annuity rate offered by the chosen insurer. Formula: monthly pension = (annuity corpus × annuity rate %) ÷ 12. For example, if your annuity corpus is ₹45 lakh and the annuity rate is 6% per annum, your monthly pension would be approximately (45,00,000 × 0.06) ÷ 12 = ₹22,500. Actual annuity rates depend on the insurer, the annuity plan chosen (life-only, joint-life, return-of-purchase-price, etc.), and prevailing interest rates at the time of retirement.

NPS Calculator — National Pension Scheme Pension & Corpus

NPS

💰 Finance⭐ Most Popular

NPS Calculator

Calculate National Pension System (NPS) maturity corpus, monthly pension, and tax savings. Models 80CCD(1) + 80CCD(1B) deductions and the annuity-vs-lumpsum split at retirement age 60.

Reviewed by the CalculatorKosh Editorial TeamUpdated June 2026Free · No sign-up

NPS Details

Current Age

yrs

18 yrs65 yrs

Retirement age is fixed at 60

Monthly Contribution

₹

₹500₹5 L

Expected Return Rate (% p.a.)

4%15%

~10% for equity-heavy mix · ~8% for debt-heavy

Annuity Portion at Maturity

40%100%

Minimum 40% must be used to purchase annuity per NPS rules

Annuity Return Rate (% p.a.)

4%10%

Typical insurer annuity rate for life cover

Drag sliders to explore different scenarios

Expected Return10%

4%15%

Years to Retirement30 yrs

5 yrs42 yrs

What-If Corpus at Age 60

₹1,13,96,627

Corpus at Retirement

₹1,13,96,627

Monthly pension: ₹22,793 · Tax-free lumpsum: ₹68,37,976 · Annual tax saved (30% slab): ₹18,000

Total Contribution

₹18.0 L

Annuity Corpus

₹45.6 L

Contributions vs Returns84.2% from returns

Contributions ₹18,00,000Returns ₹95,96,627

Contributions vs Returns over time

Drag sliders to explore different scenarios

Expected Return10%

4%15%

Years to Retirement30 yrs

5 yrs42 yrs

What-If Corpus at Age 60

₹1,13,96,627

How It Works

The National Pension System (NPS) is a voluntary, long-term retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It pools monthly contributions into a market-linked corpus invested across equity, corporate debt, and government securities — historically delivering 9-12% annualized returns over long horizons depending on fund mix. At age 60, the accumulated corpus splits between a tax-free lumpsum withdrawal and a mandatory annuity that pays you a lifelong monthly pension.

NPS corpus formula

M = P × [((1 + i)ⁿ − 1) / i] × (1 + i)

Where P = monthly contribution, i = monthly rate of return (annual ÷ 12 ÷ 100), n = total months until age 60. The extra (1 + i) reflects that each contribution lands at the start of the month (annuity-due).

The 60-40 split at retirement

At age 60, NPS rules require at least 40% of the corpus to be used to purchase an annuity from a PFRDA-empanelled life insurer. The annuity provides a monthly pension for life. The remaining (up to 60%) is withdrawn as a single tax-free lumpsum. You can choose to annuitize more than 40% — a higher annuity share means a larger monthly pension at the cost of a smaller lumpsum.

Tax benefits — 80CCD(1) + 80CCD(1B)

Section 80CCD(1) allows a deduction of up to ₹1.5 lakh per year (shared with the 80C ceiling). Section 80CCD(1B) provides an additional ₹50,000 deduction exclusive to NPS — over and above the 80C cap, taking the total possible deduction to ₹2 lakh per year. A 30%-slab taxpayer contributing the full ₹2 lakh saves up to ₹60,000 in income tax every year.

Returns are market-linked

Unlike PPF or EPF, NPS returns are not guaranteed — they depend on the performance of your chosen scheme (Active or Auto choice) and the fund managers you select. Equity-heavy allocations have historically averaged 11-13%, balanced mixes around 9-10%, and debt-heavy schemes around 7-8%. PFRDA caps equity exposure at 75% up to age 50, tapering thereafter.

Frequently Asked Questions

The National Pension System (NPS) is a voluntary, defined-contribution retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Subscribers contribute monthly into a Tier I account, the corpus is invested in a market-linked mix of equity, corporate debt, and government securities, and at age 60 the accumulated corpus is split between a tax-free lumpsum withdrawal and a mandatory annuity that provides a lifelong monthly pension. NPS is open to all citizens aged 18-70, including the self-employed.