NPS Annuity Calculator India 2025-26 Calculate Monthly Pension from NPS Corpus — Annuity Rates, Lump Sum + Pension Split, All Annuity Types

Updated: 17 Jun 2026  |  Annuity rates 5.5%–7.5%  |  Mandatory 40% annuity  |  PFRDA-regulated

📋 NPS at Retirement — Key Rules

Lump Sum (tax-free)
Max 60% of corpus
Annuity (mandatory)
Min 40% of corpus
Annuity payout
Monthly pension for life
Tax on pension
Taxable at income slab
₹50,00,000
40%
40% (minimum)100% (all as pension)

Indicative rates. Actual rates set by your chosen ASP at retirement date. Compare all PFRDA-approved ASPs.

20%

Monthly Pension

₹10,833

Annuity corpus (₹20L)₹20,00,000
Annual pension (gross)₹1,30,000
Annual tax on pension₹26,000
Net monthly pension₹8,666
Tax-Free Lump Sum
₹30,00,000
(60% of corpus)
Annuity Rate
6.5%
per annum

Annuity Type Comparison (₹20L corpus)

TypeRateMonthly

NPS Annuity — Complete Guide India 2025-26

At NPS retirement (age 60): a minimum 40% of your NPS corpus must be used to purchase an annuity from a PFRDA-approved Annuity Service Provider (ASP). The remaining 60% can be withdrawn as a lump sum — completely tax-free. The annuity provides monthly pension for life. The tax treatment: lump sum withdrawal is EEE (exempt); annuity income is taxable at your income slab rate in retirement.

NPS Annuity Types (PFRDA Approved)

Life Annuity (Without RPC): Highest monthly pension (~5.5% rate). No return of purchase price on death. Pension stops at subscriber’s death. Best if primary goal is maximum monthly income.
Life Annuity with Return of Purchase Price (RPC): Lower rate (~6.5%) but corpus returned to nominees on death. Most popular option — balances pension income with legacy preservation. Recommended for most NPS subscribers.
Joint Life (Spouse Continues): Pension continues to spouse after subscriber’s death at 50–100% of original pension. Lower rate (~6%) but protects surviving spouse. Recommended for married subscribers.
10-Year Guaranteed Period: Pension paid for minimum 10 years even if subscriber dies earlier. After 10 years: pension for life. Higher rate (~7.5%). Useful if subscriber has no dependents.

PFRDA-Approved Annuity Service Providers (ASPs)

ASPLife + RPC Rate*
LIC Annuity6.0–6.5%
SBI Life Annuity6.2–6.7%
Star Union Life6.3–6.8%
HDFC Life Annuity6.0–6.5%
Bajaj Allianz6.1–6.6%

*Rates are indicative and change frequently. Compare all ASPs on the NPS Trust portal (npstrust.org.in) before purchasing.

3 NPS Annuity Scenarios India 2025-26

1. Rajesh (Govt Employee) — ₹1.2 Cr NPS Corpus at 60, Minimum 40% Annuity 🏛️

NPS Corpus
₹1,20,00,000
Lump sum (60%)
₹72,00,000 tax-free
Annuity corpus (40%)
₹48,00,000
Monthly pension
₹26,000/mo
Rajesh has government OPS (Old Pension Scheme) too — NPS is additional. He invests the ₹72L lump sum in SCSS (8.2%, quarterly income) for ₹14,760/month additional income. Total monthly income: ₹26K NPS pension + ₹14,760 SCSS = ₹40,760/month. After tax at 20% bracket on pension: net ~₹33,000/month — comfortable retirement. Strategy: Rajesh chose “Life Annuity with RPC” at 6.5% — his ₹48L will be returned to children on his death while he receives pension throughout life.

2. Priya (Private Sector) — ₹80L NPS, Maximum Lump Sum Strategy 💼

NPS Corpus
₹80,00,000
Lump sum (60%)
₹48,00,000
Annuity (40% min)
₹32,00,000
Monthly pension
₹17,333/mo
Priya wants maximum flexibility — takes maximum 60% lump sum. She invests ₹48L in a diversified portfolio (₹20L in MF SWP, ₹15L in SCSS, ₹13L in bank FDs). Plus ₹17,333/month NPS pension. Total monthly income: ₹17,333 + SWP ₹10,000 + SCSS ₹10,250 + FD interest ₹6,500 = ~₹44,083/month pre-tax. She chose “10-Year Guaranteed Annuity” at 7.5% — higher rate with 10yr protection.

3. Vikram & Meena (Couple) — Joint Life Annuity for Spouse Protection 👫

Corpus
₹1,00,00,000
Annuity corpus
₹50,00,000
Joint Life rate
6.0% p.a.
Monthly pension
₹25,000/mo
Vikram chose Joint Life Annuity at 6% — on his death, Meena continues receiving 100% of ₹25,000/month for rest of her life. The lower rate (6% vs 6.5% for individual) is the cost of spousal protection. If Meena is younger: this protection becomes increasingly valuable. Trade-off: ₹1,667/month less pension during Vikram’s lifetime vs ₹25,000/month lifetime security for Meena. Recommended for subscribers whose spouse is financially dependent or has lower independent income.

5 NPS Annuity Tips for Indian Retirees

01

Compare All ASPs Before Purchasing — Rates Vary Significantly

Annuity rates from different PFRDA-approved ASPs can differ by 0.5–1% on the same corpus — translating to ₹500–₹1,000+ difference per month in pension. PFRDA’s NPS Trust portal (npstrust.org.in) publishes current annuity rates from all approved ASPs. Compare all options online before selecting. Your NPS retirement withdrawal form asks you to specify ASP — choose the one offering highest rate for your preferred annuity type. You only get ONE chance to choose — the annuity once purchased cannot be changed.

02

Defer Annuity Purchase by 3 Years to Potentially Get Better Rates

NPS rules allow deferring annuity purchase for up to 3 years post-retirement. If current annuity rates are low (e.g., interest rate environment declining): you can defer purchasing the mandatory 40% annuity for up to 3 years, keeping the corpus in NPS Tier I at current investment returns (typically 9–11% p.a.). Wait for a higher interest rate environment for better annuity rates. Deferral option: available without any penalty on the deferred corpus.

03

Maximise Lump Sum (60%) to Invest in Tax-Free SWP or SCSS

The 60% lump sum is completely tax-free. Invest it intelligently: Senior Citizens Savings Scheme (SCSS) at 8.2% for the maximum ₹30L provides ₹20,500/month income. Systematic Withdrawal Plan (SWP) from equity mutual funds: partially tax-efficient (only gains taxed, not principal withdrawn). Combination of SCSS + SWP + NPS pension = comprehensive retirement income strategy. Avoid parking the entire lump sum in bank FD (taxable interest) — structured approach saves more tax.

04

NPS Partial Withdrawal Before 60 — 3 Times for Specific Purposes

NPS allows partial withdrawal (up to 25% of own contributions, not total corpus) before age 60 for specific reasons: (1) higher education of children; (2) marriage of children; (3) home purchase/construction; (4) medical treatment for critical illness (11 specified diseases). After 3 years of NPS membership. Maximum 3 withdrawals in lifetime. Tax: partial withdrawals from NPS are fully exempt from tax. This provides liquidity without breaking the NPS account — useful for education or health emergencies.

05

NPS vs EPF vs PPF for Retirement — NPS Best for High Earners

NPS advantages over EPF/PPF: additional ₹50K tax deduction (80CCD 1B) beyond ₹1.5L 80C limit; employer NPS contribution (up to 14%, Budget 2026) tax-free; equity exposure (NPS allows up to 75% in E fund — higher returns potential). Disadvantages: mandatory 40% annuity (taxable); annuity rates lower than expected return on equity. For high earners (₹15L+): NPS + EPF + PPF + ELSS = optimal combination. The ₹50K additional 80CCD 1B deduction alone saves ₹15,600/year at 30% bracket + cess.

Frequently Asked Questions — NPS Annuity India

How much monthly pension from NPS?+
Monthly pension = (Annuity corpus × Rate) ÷ 12. Example: ₹50L corpus × 40% annuity × 6.5% ÷ 12 = ₹10,833/month gross. Tax reduces to ~₹8,667/month at 20% bracket. Use calculator above.
How much can be withdrawn as lump sum from NPS?+
Maximum 60% as tax-free lump sum. Minimum 40% mandatory annuity. Below ₹5L corpus: 100% lump sum allowed. Annuity once purchased cannot be changed.
Is NPS pension income taxable?+
Yes — annuity (monthly pension) is taxable at income slab rate. Lump sum 60%: completely tax-free. Plan annuity to keep total retirement income in lower brackets.
NPS annuity rate 2025-26?+
Life without RPC: 5–5.5%. Life with RPC: 6–6.7%. Joint life: 5.5–6.2%. 10yr guaranteed: 6.8–7.5%. Compare all ASPs on npstrust.org.in before purchasing — rates differ by ASP and change over time.
Which annuity type is best for NPS?+
Married with dependent spouse: Joint Life. No dependents: 10-Year Guaranteed (highest rate). Want to leave corpus for children: Life with RPC. Maximum monthly pension: Life without RPC.
Can I defer NPS annuity purchase?+
Yes — up to 3 years post-retirement. Corpus remains in NPS earning returns. Useful to wait for higher interest rate environment for better annuity rates.
What is 80CCD 1B extra NPS deduction?+
Additional ₹50K deduction beyond ₹1.5L 80C limit. Saves ₹15,600/year at 30% bracket. Available in both old and new regime. One of the best tax-saving instruments in India.
NPS vs EPF vs PPF for retirement?+
NPS: equity exposure, ₹50K extra deduction, mandatory 40% annuity. EPF: guaranteed 8.25%, EEE. PPF: guaranteed 7.1%, EEE, 15yr lock-in. Best strategy: all three + ELSS for maximum diversification and tax benefit.
NPS partial withdrawal before 60?+
After 3 years NPS membership. Max 25% of own contributions. 3 withdrawals in lifetime. Specific purposes: child education/marriage, home purchase, critical illness. 100% tax-free.
NPS on death of subscriber?+
Before retirement: 100% to nominee (no annuity mandatory). After retirement: depends on annuity type — Life with RPC: purchase price returned; Joint life: pension to spouse; 10yr guaranteed: continues to nominee within 10yr period.
Should I put more than 40% in NPS annuity?+
Generally no — invest minimum 40%, use 60% lump sum in SCSS (8.2%) + POMIS + debt SWP for better post-tax income. Annuity income taxable; lump sum and SCSS options often better post-tax returns.
NPS Tier I vs Tier II?+
Tier I: locked, tax benefits, mandatory annuity at 60. Tier II: flexible withdrawal anytime, no tax benefit (except govt employees). Both have same investment options. Maximise Tier I for tax benefits; Tier II only for medium-term goals.
PFRDA approved ASPs list?+
LIC, SBI Life, Star Union Dai-ichi, HDFC Life, Bajaj Allianz Life, Kotak Life, Tata AIA. Compare current rates on npstrust.org.in. Rates differ by 0.5–1% between ASPs — compare before purchasing.
NPS for self-employed?+
Fully available. Deduction: 80CCD(1) up to 20% of gross income + 80CCD(1B) ₹50K. Self-employed on ₹10L income: up to ₹2.5L NPS deduction total. Excellent for freelancers needing structured retirement savings.
NPS exit process at 60 — step by step?+
Login to CRA (NSDL/CAMS) → Submit withdrawal request → Choose ASP (compare rates first) → Submit KYC → Lump sum to bank (tax-free) → Annuity to ASP → First pension in 30 days. Processing 3–5 working days.
NPS investment options E, G, C?+
E fund: equity (up to 75%, 10–12% historical). G fund: govt bonds (7–8%). C fund: corporate bonds (8–9%). A fund: alternative. Young subscribers: maximise E. Near retirement: shift to G. Auto choice available for age-based rebalancing.
Can I have NPS and EPF simultaneously?+
Yes — hold both simultaneously. EPF mandatory for formal sector employees. NPS voluntary. Government employees post-2004: NPS mandatory. Optimal retirement portfolio: EPF + NPS + PPF + ELSS.
What is PFRDA?+
Pension Fund Regulatory and Development Authority — regulates NPS. Sets rules for contributions, withdrawals, annuity. NPS Trust holds funds. CRAs (NSDL/CAMS): maintain records. Complaints: npstrust.org.in or pfrda.org.in.
NPS annuity formula?+
Monthly pension = (Total corpus × Annuity%) × Annual rate ÷ 12. Example: ₹1Cr × 40% = ₹40L annuity corpus. ₹40L × 6.5% ÷ 12 = ₹21,667/month. After 20% tax: ₹17,333/month net.
Budget 2026 NPS employer contribution limit?+
Raised from 10% to 14% of basic salary — tax-free. On ₹8L basic: extra ₹32K/year tax-free NPS. Negotiate 14% employer NPS with HR from FY 2026-27. Over 25 years at 10% NPS return: ₹32K/yr grows to ₹34.6L.

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Disclaimer

Annuity rates are indicative. Actual rates set by ASP at purchase date. Always compare all PFRDA-approved ASPs before purchasing. Pension taxable at slab rate.

Regulatory: NPS regulated by PFRDA — pfrda.org.in. Annuity rates: NPS Trust — npstrust.org.in. Insurance regulation: IRDAI — irdai.gov.in. Last Updated: 17 Jun 2026.