NPS for Salaried Employees: How the Corpus Builds Up
A worked example of how an NPS corpus grows over 30 years, how return assumptions and starting age change it, and what the 60/40 split in our calculator leaves out.
The National Pension System (NPS) is a market-linked retirement account. For a salaried person the question is rarely "what is NPS" and more often "how big could this get, and how much of it can I actually take out?" This post answers the first question with numbers you can reproduce in our NPS calculator, and is honest about the second, where the rules have recently changed. It is general information, not investment or tax advice.
How the calculator builds the corpus
You enter your current age, the amount you invest each year and an expected annual return. The tool assumes you contribute every year until age 60, so the number of years is 60 minus your age. Each year's contribution is treated as made at the end of the year, and the corpus is:
corpus = yearly contribution × ((1 + r)^years − 1) ÷ r
It then shows 60% of that corpus as a lump sum and 40% as an annuity amount. Nothing else is modelled: no salary growth, no changes in contribution, no fees, and one constant return for the whole period.
Worked example: age 30, Rs. 50,000 a year, 10% return
That is 30 years of contributions, Rs. 15,00,000 in total. The tool gives:
- Corpus: Rs. 82,24,701 (about Rs. 82.2 lakh)
- Lump sum (60%): Rs. 49,34,821
- Annuity (40%): Rs. 32,89,880
Look at the proportions: you put in Rs. 15 lakh and the projected corpus is more than five times that. Most of the growth comes from the final decade, because returns compound on a larger balance. That is the real lesson of the example, and it is the reason the next section matters.
Why the return assumption matters so much
Keeping everything else the same (age 30, Rs. 50,000 a year, 30 years), here is how the corpus responds to the return you assume:
| Assumed return | Corpus at 60 |
|---|---|
| 8% | Rs. 56,64,161 |
| 10% | Rs. 82,24,701 |
| 12% | Rs. 1,20,66,634 |
A four-point swing in the assumed return changes the end result by about Rs. 64 lakh. NPS returns depend on how you split money between equity, corporate bonds and government securities, and they vary from year to year. A 10% default is an assumption, not a promise. Try a conservative number and see whether the plan still works.
Why starting age matters
With the same Rs. 50,000 a year at 10%, a person who starts at 40 instead of 30 contributes for only 20 years, and the tool shows a corpus of Rs. 28,63,750 (about Rs. 28.6 lakh). Starting ten years later cuts the contributions by a third but cuts the corpus by about two thirds. If you can only increase one thing, starting earlier usually beats contributing slightly more later.
The same logic applies if you raise the contribution. At age 30 and 10%, doubling to Rs. 1,00,000 a year gives Rs. 1,64,49,402. The tool scales linearly with contribution, so the choice is between saving more and starting earlier, and the table above shows which lever is stronger.
The 60/40 split is out of date for many subscribers
This is the biggest limitation of the tool. For years the rule was that at normal exit you could take 60% as a lump sum and had to use at least 40% to buy an annuity. In December 2025 the pension regulator PFRDA amended the exit and withdrawal rules for non-government subscribers. As reported by several financial publications, the changes include allowing up to 80% as a lump sum with at least 20% used for an annuity for larger corpuses, higher thresholds for full withdrawal of small corpuses, and a later maximum exit age. The exact conditions depend on your account type (government, corporate or all-citizen model) and corpus size.
Our calculator still shows 60/40. If the newer rules apply to you, the lump sum could be larger. At the same example corpus, 80/20 would be about Rs. 65.8 lakh lump sum and Rs. 16.4 lakh annuity, but treat that only as an illustration of the arithmetic. Check the current PFRDA regulations or your pension fund's notice for your own account type before planning around any split.
NPS next to PPF and EPF
Many salaried people already have other long-term accounts. The EPF is deducted from your salary and earns a rate declared each year; our EPF calculator estimates the employee share. The PPF has a fixed 15-year term and a government-set rate; use the PPF calculator for that. The practical difference is risk and flexibility: NPS can hold equity and its value moves with markets, while EPF and PPF follow declared rates. A framework that works for many people:
- Decide the total amount you can lock away for retirement each year.
- Take the fixed-rate parts first (EPF is automatic).
- Choose how much of the remainder goes to market-linked NPS based on how much volatility you can live with over 20 to 30 years.
- Run the NPS calculator at a low, middle and high return, and plan on the low one.
Tax treatment of NPS contributions differs between the old and new tax regimes and has its own conditions, so confirm what applies to you rather than assuming.
What this calculator does not do
- It assumes one constant return. Real NPS returns change every year and depend on your asset allocation.
- It uses end-of-year contributions and a single annual contribution, not monthly deposits, so the result will differ slightly from a real account.
- It does not estimate the monthly pension; that depends on the annuity provider's rate at the time you buy.
- It does not include fund management charges or other costs.
- It does not model inflation, so a corpus of Rs. 82 lakh in 30 years will buy much less than Rs. 82 lakh today.
- If you enter an age of 60 or more, there are no contribution years and the result is not meaningful.
- It does not model tax benefits or tax on annuity income.
Use it to compare scenarios, not to forecast. For actual decisions, read the current scheme documents and consider speaking to a qualified financial adviser.