NPS Annuity Planning: The National Pension System (NPS) Tier I account focuses on retirement planning of an NPS account holder. It allows an account holder to withdraw up to 60 per cent of their retirement corpus in the form of a lump sum amount at 60 years of age. From the remaining minimum 40 per cent corpus, they need to purchase an annuity plan. The return from this annuity investment provides a monthly pension to NPS account holders. If NPS account holders want, they can purchase an annuity plan from 100 per cent of their retirement corpus. If you have an Rs 2 crore retirement corpus and decide to purchase an annuity from the Rs 1 crore amount, how much monthly pension may you get in different types of NPS annuities? See calculations to know-

Types of NPS annuity

NPS provides 5 types of annuity plans-

Annuity for life with ROP (Return of purchase price)

In this type of NPS annuity, the NPS account holder (annuitant) gets the monthly payout. After their death, the pension ceases, and the purchase price is returned to the nominee of the account holder.

Annuity for Life without ROP

In this annuity, the annuity payment ceases on the death of the NPS account holder (annuitant), and the purchase amount is not returned to the nominee.

Joint life annuity with ROP

Here, on the death of the annuitant, the annuity amount is paid to the spouse during their lifetime, and the purchase price is returned to the nominee after the death of the annuitant’s spouse.

Joint life annuity without ROP

In this annuity type, after the death of the annuitant, the annuity is paid to the spouse during their lifetime. If the spouse predeceases the annuitant, the annuity payment ceases after the death of the annuitant.

Family income with ROP

This annuity option is available to government sector employees only. In this annuity type, the annuitant gets an annuity for life. 

After their death, their spouse gets it for a lifetime. After the death of the spouse, the annuity payment goes to the living dependent mother and father of the deceased annuitant.

After the coverage of these family members, the annuity payment ceases, and the 100 per cent payment is returned to the surviving children of the annuitant, and in the absence of children, legal heirs of the annuitant.

What do we want to know

We are calculating the estimated monthly pension for an NPS account holder who purchases an annuity plan worth Rs 1 crore from their Rs 2 crore retirement corpus. We are taking Pension Fund Regulatory and Development Authority (PFRDA)-recognised annuity providers. Our conditions are-

NPS account holder- Government sector

Annuity purchase amount- Rs 1 crore 

NPS account holder’s age- 60 years

NPS account holder’s spouse age- 58 years

Annuity frequency- Monthly 

Annuity amount in different NPS annuity plans 

Annuity for Life (With ROP)- Minimum (Rs 51,652.40), Maximum (Rs  57,020)

Annuity for Life (Without ROP)- Minimum (Rs 61,489), Maximum (Rs 76,002)

Joint Life Annuity (With ROP)- Minimum (Rs 52,818), Maximum (Rs 57,028) 

Joint Life Annuity (Without ROP)- Minimum (Rs 53,749), Maximum (Rs 67,008)

NPS- Family Income (With ROP)- Minimum (Rs 48,326), Maximum (Rs 57,028)

Annuity amounts detailed list (with providers)