A worked example: age 30, ₹5,000/month, 10% expected return
Starting at age 30, contributing ₹5,000 a month until retirement at 60 with an expected 10% annual return builds a corpus of ₹1,13,96,626.62 from ₹18,00,000 actually contributed.
The 40/60 split: annuity corpus and lump sum
NPS rules require at least 40% of the corpus to purchase an annuity: 40% of ₹1,13,96,626.62 is ₹45,58,650.65, leaving ₹68,37,975.97 available as a lump sum withdrawal. At an assumed 6% annuity rate, the annuity corpus funds an estimated monthly pension of ₹22,793.25.
Starting earlier and contributing more: age 25, ₹10,000/month
Starting 5 years earlier at age 25 and doubling the monthly contribution to ₹10,000 builds a corpus of ₹3,82,82,767.02 from ₹42,00,000 contributed — more than triple the first example's corpus, from both extra compounding years and a larger monthly contribution.
Why the corpus grows faster than contributions
Total contributed in the second example (₹42,00,000) is only a little more than double the first (₹18,00,000), but the resulting corpus (₹3,82,82,767.02) is more than triple — the extra 5 years of compounding at 10% annually accounts for more of the difference than the doubled contribution alone.