1. Depending upon Basic Pay in the 7th Pay Commission Matrix selected in the tool, monthly contribution in NPS by the employee which is 10% of sum of Basic Pay and Dearness Allowance and employer contribution in NPS to the extent of 14% of sum of Basic Pay and Dearness Allowance are calculated from the present date till the retirement date selected.
  2. In order to give annual increment in Basic Pay of the Central Government Employees vertical indices in 7th Pay Commission Pay Matrix is used.  Hence, Basic Pay in the next year from the present date will be the basic pay available in the next index in the same level. (Checkout 7th Pay Commission Pay Matrix here) . Want to know how annual increment is granted after implementation of 7th Pay Commission recommendations ? Checkout here.
  3. The tool also takes in to account the revision in Dearness Allowance.  Unlike Basic Pay, it is not possible to determine future DA payable to Central Government Employees.  Hence the tool takes yearly increase in DA selected by the user in the tool.
  4. Likewise Rate of annual return on investment in NPS will have to be chosen by the user in the tool.  From the year of inception (2008) till March 2019, all the three funds of NPS (SBI, LIC and UTI) have delivered average annual return of around 9% since Net Asset Value of these funds have appreciated to Rs. 27, from the face value of Rs.10.
  5. The maturity value of investment in NPS on the date of retirement is divided in to two parts on the basis of percentage of Annuity Fund selected by the user.  As per the present NPS regulations, minimum of 40% of Maturity value will have to be invested with an Annuity Provider approved by PFRDA.  Remaining amount will be paid to retiring employee in Lump Sum.
  6. The Monthly Pension from the Annuity Fund allocated is calculated as per the percentage chosen by the user.  Average annuity rate of Pension Funds operating in India presently is around 5 % to 6%.

Checkout this detailed article on NPS Calculator and various factors that affect NPS returns

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