1. What is NPS Annuity?

The National Pension System (NPS) annuity is a regular payment you receive after retirement by using a portion of your accumulated pension corpus to purchase an annuity plan from a life insurance company.

2. How Does the Calculator Work?

The calculator uses the NPS annuity formula:

Where:

• \( Corpus \) — Total accumulated pension amount
• \( Purchase\% \) — Percentage of corpus used to buy annuity (typically 40%)
• \( Rate \) — Annuity rate offered by the insurance company

Explanation: The formula calculates the annual annuity payment you would receive based on your corpus, the portion used to purchase annuity, and the prevailing annuity rate.

3. Importance of Annuity Calculation

Details: Calculating your potential annuity helps in retirement planning by estimating your post-retirement income stream from NPS.

4. Using the Calculator

Tips: Enter your total corpus amount in ₹, the percentage of corpus you plan to use for annuity purchase (typically 40%), and the current annuity rate offered by providers.

5. Frequently Asked Questions (FAQ)

Q1: What percentage of corpus can be used for annuity?
A: Currently, at least 40% of the corpus must be used to purchase an annuity at the time of exit from NPS.

Q2: What are typical annuity rates?
A: Annuity rates vary between providers and change periodically, typically ranging between 5-7% per annum.

Q3: Can I choose different annuity options?
A: Yes, various options are available like lifetime annuity, annuity with return of purchase price, increasing annuity, etc.

Q4: Is the annuity amount taxable?
A: The annuity income is taxable as per your income tax slab in the year of receipt.

Q5: Can I change my annuity provider later?
A: No, once you purchase an annuity, you cannot change the provider or terms of the annuity.