1. What is NPS Scheme Pension?

The National Pension System (NPS) is a government-sponsored pension scheme in India. At retirement, a portion of the corpus can be withdrawn tax-free, while the remaining amount must be used to purchase an annuity that provides regular pension payments.

2. How Does the Calculator Work?

The calculator uses the NPS pension formula:

Where:

• Annuity Purchase — The amount used to buy the annuity (INR)
• Annuity Factor — Provided by the annuity service provider, based on current rates and your age

Explanation: The annuity factor determines how much monthly pension you'll receive for each rupee of annuity purchase.

3. Importance of Pension Calculation

Details: Accurate pension estimation helps in retirement planning and ensures you can maintain your desired lifestyle after retirement.

4. Using the Calculator

Tips: Enter the amount you plan to use for annuity purchase and the current annuity factor provided by your pension provider.

5. Frequently Asked Questions (FAQ)

Q1: What is the minimum amount required for annuity purchase?
A: As per current NPS rules, at least 40% of the corpus must be used to purchase an annuity at the time of retirement.

Q2: How is the annuity factor determined?
A: The annuity factor depends on your age, prevailing interest rates, and the type of annuity plan you choose.

Q3: Can I change my annuity provider later?
A: No, once you purchase an annuity, you cannot change the provider or terms of the annuity.

Q4: Are pension payments taxable?
A: Yes, the pension received from NPS annuity is taxable as income under the head "Income from Other Sources".

Q5: What happens to the annuity after my death?
A: This depends on the annuity option you choose. Some plans provide for continuation of pension to spouse or return of purchase price to nominees.