National Pension Scheme or NPS is a government-launched scheme to provide financial stability to senior citizens. The NPS pension calculator online will help you calculate NPS and determine the amount you’ll receive as a pension corpus. Calculating NPS is necessary to know whether the investment will give you the returns you are looking forward to or not. Read ahead to find out everything about calculating NPS.
What is an NPS Calculator and How Can it Help?
The NPS return calculator can help an investor to get an estimate of the maturity amount of the whole investment. With the NPS return calculator, investors can know how much they will receive as a pension when they retire. The NPS pension calculator gives investors an idea about how much to invest monthly to receive a suitable corpus upon retirement. The maturity amount depends on the investment amount and returns generated. You can use an NPS calculator for calculating NPS to have an early estimation before starting investment in this scheme.
The more money you invest, the higher returns you get. You also have the option to select between debt and equity, which helps you to check the expected retirement corpus based on your risk appetite when calculating NPS.
The age limit to invest in NPS is between 18 to 60 years. An investor should also consider KYC guidelines issued by all the organizations that dispense the scheme.
How Does National Pension Scheme Calculator Work?
The NPS calculator can help investors willing to invest in NPS. By calculating NPS return, you can determine a pension amount for the future. You can use the NPS calculator online by going through the official website of your trustworthy NPS provider. Here’s how the NPS calculator online functions-
- Enter your current age and your retirement age
- Enter the amount you will invest every month
- Your investment return goal
- Enter the annuity period, i.e., the number of years you wish to receive a pension
- Enter your expected interest rate on your investment that you wish to earn from the pension post your retirement
- A pension is a monthly investment that is made available to an individual after his/her retirement.
- The annuities in NPS depend on the rate of interest applied and the time period for which the investment is made.
- The NPS is a financial instrument that guarantees a secure retirement to many individuals.
- Calculating NPS can help to estimate the pension amount which you will receive at the time of your retirement.
- With the help of the NPS pension calculator, you can easily determine the returns you will receive once the term is over.
Also Read: NPS Benefits
Details Required for NPS Calculation
For Calculating NPS, there are a few details you need to enter in the calculator to determine the lump sum you will receive upon the scheme maturity. You can also change the timelines in the NPS return calculator to get your desired results. Here are the details –
- Your date of birth
- Monthly contributions
- Your age till which you can contribute to the scheme
- Your return expectations from the investment
- The annuity rate you’re expecting
- Annuity rate on which you would like to purchase the scheme
Who Should Use an NPS Calculator?
Anyone who is investing or is eligible to invest in the National Pension Scheme can use the NPS calculator online. The investor has to be an Indian citizen and should be in between 18 to 60 years of age. To be eligible for investment, investors must comply with the scheme’s rules and regulations set by the government.
Also Read: NPS vs PPF
Did You Know?
National Pension Scheme provides financial security during retirement when people do not have a stable source of income. NPS also provides tax benefit on the contribution, and the amount that an investor uses to buy the annuity is exempt from tax under Section 80C of the Income Tax Act, 1961.
Benefits of Using NPS Calculator
Here are some benefits you get by calculating NPS:
- NPS calculator is specially designed to calculate the estimated pension amount that an individual will receive at the time of retirement. The NPS calculator saves time as you do not have to do any calculations manually.
- You will have a clear vision of how much investment you need to make in order to achieve the desired pension amount. Additionally, you can also do financial planning more efficiently.
- By calculating NPS, investors can make a decision on how much to contribute each month to NPS so that they can have a lump sum estimated amount to be used for retirement plans and purposes. The more you contribute each month, the more benefits you will receive and create a pension wealth. Depending on the monthly income, NPS investors can determine what amount is suitable for them to contribute to the NPS.
- The NPS calculator is easily accessible online, and it is simple to use. You can get results within seconds and can be used multiple times for the investor to be sure of the investment. The NPS calculator is also free of charge, and you can use it without any hassles.
- NPS calculator online tool helps investors to check and see how much wealth will be accumulated at the age of 60 if they continue to deposit the amount which is comfortable for them. Thus, the NPS calculator is the best way to start with the NPS account as it will lay out a goal and a path that needs to be followed.
The NPS accounts also come with income tax benefits. All NPS accounts are eligible for partial tax exemption under Section 80C of the Income Tax Act, 1961. The contribution amount in NPS is completely tax-free. Although, you must keep in mind that the revenue or income that is generated from the purchased annuities is not exempted from tax. The income generated from the pension plan by the NPS account holder is liable to taxation.
Word to Remember
The annuity rate, or interest rate, is currently 9% to 12%. The government sets the annuity rate.
Investing in an NPS account allows people to have a secure future and a concrete plan of action for their retirement. It provides the citizens to have a secure and financially stable retirement prospect. By calculating NPS, you can know the estimated amount that you will receive as a pension after your retirement. You will get all the details of your investment within seconds.
The current interest rate on the National Pension Scheme account is 9% to 12%, depending on the type of scheme and subscriber.
The NPS calculation formula is similar for all pension schemes. NPS calculator uses compounding interest to calculate returns.
The following is the formula for calculating the NPS amount:
A = P (1 + r/n) ^ nt
A = Maturity amount
P = Principal sum
r = Interest rate per annum
n = Number of times interest compounds
t = Total tenure
NPS is backed by the Indian government, so it is quite popular among investors who are looking for a risk-free investment.
The contribution which you have made towards the NPS is eligible for tax exemption under Section 80C of the Income Tax Act, 1961.
Yes, NPS is one of the pension schemes that provide a monthly pension after you reach the age of 60.
Any Indian citizen who falls between the age of 18 to 60 years is eligible to take the National Pension Scheme account.