NPS builds a retirement corpus through working years. At 60, at least 40% must buy an annuity (monthly pension); the remaining 60% is a tax-free lump sum.
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At 60, minimum 40% of corpus must purchase an annuity from an insurer. That gives a monthly pension for life. The remaining 60% is withdrawn tax-free as a lump sum. Annuity income is taxable as salary.
Annuity rates vary by insurer and type. This figure is illustrative. See our full disclaimer.