The National Pension Scheme (NPS) does not offer a defined minimum pension amount. The actual pension you receive depends on several factors – primarily the total corpus you accumulate by the retirement age.
Let me share a real-life example to explain this better. I started investing in NPS around 5 years back by contributing ₹3,000 per month. I was unsure about how it would work at first, but I felt it was wise to start saving for retirement. Over the years, I have seen modest growth in my NPS investments across the equity and debt funds I picked. However, I realised that if I continued the same ₹3,000 monthly contribution till age 60, my retirement corpus would be around ₹40-50 lakhs based on market returns.
As per NPS rules, I can withdraw 60% of this corpus as a lumpsum and must compulsorily use 40% to purchase an annuity plan providing a monthly pension. So, in my case, the pension may amount to only ₹8,000-10,000 per month, which may not be enough to cover living costs in old age.
On the other hand, contrast this with my cousin’s example—he began investing at 25 with ₹5,000 monthly contributions. Assuming the same growth rate, he is likely to accumulate over ₹1 crore by the time he turns 60. Using an NPS calculator or NPS Prosperity Planner we estimated that his monthly pension could easily exceed ₹20,000, which is a lot more comfortable compared to what I might receive. This really shows how starting early and contributing consistently can make a huge difference in the pension amount you get from NPS.
This exemplifies that while NPS does not guarantee a fixed minimum pension, starting early and investing higher amounts can significantly improve retirement savings. The pension is directly proportional to the retirement corpus, which depends on contribution tenure, invested capital, and portfolio returns.
