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NPS Pension Formula:
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The NPS (National Pension System) pension calculation determines the monthly pension amount you will receive after retirement based on your accumulated corpus and the annuity rate. It helps in retirement planning and financial security.
The calculator uses the NPS pension formula:
Where:
Explanation: The formula converts the annual pension (corpus × annuity rate) into monthly payments by dividing by 12 months.
Details: Proper pension planning ensures financial stability during retirement years. NPS provides a systematic way to build retirement corpus with tax benefits and market-linked returns.
Tips: Enter the total accumulated corpus in INR and the annuity rate as a decimal (e.g., 0.06 for 6%). Both values must be positive, with annuity rate between 0 and 1.
Q1: What is an annuity rate in NPS?
A: Annuity rate is the percentage return offered by the annuity provider on your corpus to determine your pension amount. It typically ranges from 5% to 7% annually.
Q2: How is corpus accumulated in NPS?
A: Corpus is built through regular contributions during your working years, which are invested in various fund options (equity, debt, government securities) based on your risk preference.
Q3: Can I withdraw the entire corpus at retirement?
A: No, at least 40% of the corpus must be used to purchase an annuity that provides monthly pension. Up to 60% can be withdrawn as lump sum (taxable).
Q4: What factors affect annuity rates?
A: Annuity rates depend on age, type of annuity (life, joint life, with return of purchase price), prevailing interest rates, and the insurance company.
Q5: Is NPS pension taxable?
A: The monthly pension received from NPS is taxable as income under the head "Income from Other Sources" as per your applicable income tax slab.