Compare NPS Tier 1 and Tier 2 with this calculator. Estimate projected corpus, total contributions and returns using the same monthly investment, expected annual return and investment period.
The NPS Tier 1 vs Tier 2 Calculator compares the projected corpus from monthly contributions to the two NPS account types. It helps salaried employees, government employees, private-sector employees, self-employed professionals and retirement savers compare the same investment assumption across both accounts.
PFRDA describes Tier I as the Individual Pension Account and Tier II as an optional investment account for subscribers with an active Tier I account. Regular Tier II permits withdrawals at any time. Tier I follows PFRDA withdrawal and exit rules. PFRDA's NPS account guidance also states that Tier I is eligible for tax benefits while regular Tier II has no tax benefits.
The calculator uses a financial future-value formula for monthly contributions. PFRDA regulates the NPS accounts and withdrawals; it does not prescribe this projection formula or guarantee the return used in the calculation.
Monthly rate:
r = (1 + Annual Return / 100)^(1/12) − 1
Number of months:
n = Investment Period × 12
Future value:
FV = P × [((1 + r)^n − 1) / r] × (1 + r)
P is the monthly contribution. r is the effective monthly return. n is the number of monthly contributions. The final (1 + r) factor assumes each contribution is made at the beginning of the month.
If the annual return is 0%, the calculator uses FV = P × n to avoid division by zero. The result is a projection, not a promised NPS return.
The withdrawal rules come from the PFRDA Exits and Withdrawals Regulations, 2015, last amended on 20 July 2026. The current PFRDA account guidance also confirms that regular Tier II has no withdrawal restriction.
For tax treatment, the Income Tax Department confirms that the Income-tax Act, 1961 was repealed from 1 April 2026 and the Income-tax Act, 2025 applies for the new tax period. NPS tax provisions continue under the new framework. Income Tax Department — Income-tax Act 2025
The calculation uses identical mathematics for both accounts. If you enter identical contributions, return and period, the projected corpus will also be identical. The legal and tax differences do not change the mathematical projection.
Suresh invests ₹5,000 every month in Tier I and ₹5,000 every month in Tier II. He uses a 10% annual return assumption and a 20-year period.
His contribution to either account is:
₹5,000 × 12 × 20 = ₹12,00,000
The effective monthly rate is:
(1 + 10/100)^(1/12) − 1
≈ 0.7974% per month
Using the beginning-of-month contribution formula, each account produces a projected corpus of about ₹36.20 lakh.
| Particular | Tier I | Tier II |
|---|---|---|
| Monthly contribution | ₹5,000 | ₹5,000 |
| Investment period | 20 years | 20 years |
| Assumed annual return | 10% | 10% |
| Total contribution | ₹12.00 lakh | ₹12.00 lakh |
| Projected corpus | ₹36.20 lakh | ₹36.20 lakh |
The projected difference is ₹0 because the inputs are identical.
Your actual NPS outcome can differ because investment returns vary. Use the return field as a planning assumption, not as a fixed rate.
The tool compares projected corpus only. Account eligibility, withdrawal rules and tax treatment still depend on the applicable NPS and income-tax rules.
PFRDA's current All Citizen Model guidance says Tier I is the default Individual Pension Account and Tier II is an optional account available to subscribers with an active Tier I account. It also states that Tier II has no withdrawal restrictions and that regular Tier II has no tax benefits. PFRDA's current NPS account guidance
The current PFRDA Exits and Withdrawals Regulations are the 2015 regulations last amended on 20 July 2026. For regular Tier II, the regulation permits a subscriber with a valid and active Tier II account to withdraw accumulated wealth in full or in part at any time, subject to the account having sufficient wealth for the applicable withdrawal amount and charges. PFRDA's 20 July 2026 regulations
Do not confuse regular Tier II with the Tier II-Tax Saver Scheme. PFRDA says the Tax Saver Scheme is available only to eligible Central Government subscribers and has a three-year lock-in. PFRDA pension-fund guidance
The Income Tax Department states that the Income-tax Act, 1961 was repealed from 1 April 2026 and that the Income-tax Act, 2025 governs the new tax period. For NPS tax treatment, use the current Act and applicable rules for the relevant tax year. Income Tax Department's current Act page
Tier I fits retirement-focused saving because it is the Individual Pension Account and follows regulated withdrawal and exit rules. Regular Tier II fits investors who need easier access to their money. PFRDA also distinguishes their tax treatment. Compare liquidity, retirement discipline and your tax position rather than choosing only from the projected corpus.
Yes. PFRDA's current regulations allow a subscriber with a valid and active regular Tier II account to withdraw accumulated wealth fully or partly at any time, subject to the account having sufficient wealth for the withdrawal and applicable charges. Tier II-Tax Saver follows a separate three-year lock-in.
Regular Tier II does not receive the NPS tax benefits available to Tier I. PFRDA's current account guidance states that Tier II is an investment account without tax benefits. The Income Tax Department's current law applies from 1 April 2026, so use the applicable tax-year provisions when assessing any tax consequence.
Not automatically. The calculator uses the same return assumption for both accounts, so identical contributions and periods produce identical projected corpus values. Actual NPS performance depends on the investment choice and market returns. Account rules, liquidity and tax treatment create the practical differences.
Yes. PFRDA states that Tier II is available to a subscriber who has an active Tier I account. Tier II is an optional investment account, not the primary pension account. If the Tier I account closes, the regular Tier II account is also closed under the applicable NPS rules.
Tier I is the Individual Pension Account and follows NPS withdrawal and exit rules. Regular Tier II is an optional investment account linked to an active Tier I account and allows withdrawals at any time. PFRDA also states that Tier I is eligible for tax benefits while regular Tier II has no tax benefits.
Tier II offers more liquidity than Tier I, but the money remains invested in market-linked NPS options. A higher withdrawal facility does not make the return guaranteed. If you're using Tier II for a short-term goal, check your time horizon and risk capacity before committing money.
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For informational purposes only. Results are estimates based on the inputs you provide and the rules in effect for the period shown, and are not tax, legal or financial advice. Verify figures against the relevant official source and consult a qualified professional before acting on them. Accuracy & limitations
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