How to Use NPS Calculator Online and its Benefits?

Posted by Nidhi on February 26th, 2021

Imagine playing your favourite track online using personal Wifi, but you need to step out of the house. Do you stop listening to music? You would use your mobile data when you can no longer access WiFi. Similarly, when you retire and your regular salary stops flowing in, will you cease to keep up with your daily needs? You would certainly like to make arrangements now for carefree post-work years. You can keep the ball rolling with the National Pension Scheme (NPS pension fund).

NPS pension fund is a contribution-based pension scheme initiated by the Government of India. You build up a corpus upon retirement by investing a nominal amount now. The corpus amount gathered at the time of maturity of the scheme determines the sum you will receive as pension thereafter.

Are you curious to find out the amount that will be accumulated on maturity? Do you want to know what your approximate monthly pension will be? The NPS calculator does that for you.

Understanding NPS calculator

The NPS calculator helps you calculate the corpus and the approximate pension amount under NPS. The same is determined based on the following factors:

• Your monthly contribution

• The annuity purchased

• The expected investment return rate

Please keep in mind that the NPS calculator only gives an approximation and not the exact figure.

How is the online calculator useful?

The online NPS calculator is an easy-to-use tool for identifying where you will stand financially once you stop working. It is useful and how:

• It helps you determine the corpus you are entitled at the end of the investment period and the amount you will receive every month-end

• Likewise, it tells you how much you need to invest now in order to gather the desired sum at the end of the investment and generate a desired monthly income thereafter

• NPS calculator shows you all the figures in details related to—1) 40% of the sum invested in the annuity, 2) the tax levied on the remaining 60%

• You can tweak the input parameters and see what difference it makes to the overall returns

How does the online calculator work?

Here’s step-by-step guidance for using the NPS online calculator:

• Enter details such as

1. Present age and expected retirement age- The calculator will calculate the number of years you will be contributing to NPS

2. Monthly investment amount

3. Desired return on your NPS investment

4. Annuity period in years- This is the period during which you wish to receive a monthly pension

5. Annuity percentage- This is the percentage that you wish to reinvest in buying the annuity

6. Desired annuity rate

• Once the details are entered, the calculator computes an approximate corpus and the monthly pension amount using a compounding method.
  
  

• The NPS calculator provides details of your investment- the amount invested throughout the tenure, interest received and the corpus generated at the time of maturity. It displays the break-up—the amount to be reinvested, the monthly pension amount and the lump sum to be withdrawn.

Benefits of the online calculator

• No more complicated manual calculation required

• Guarantees right result all the time

• Knowing your pension amount will help you plan your finances

Summary

You can use the NPS online calculator if you are eligible to invest in the NPS pension fund, that is, if you are anywhere between 18 and 60 years of age. You are just a click away from knowing where you stand financially after 60.