Annuity
A pension for life bought from an insurer with a lump sum, at a fixed rate.
You pay once; the insurer pays a fixed amount every month or year for life (and, with some options, your spouse's life, or returns the lump sum to your nominee). The pension is taxed at your slab rate.
It never runs out, but it doesn't rise, so inflation reduces what it buys. Part of an NPS corpus must buy an annuity at exit.
Example
₹50 lakh at a 7% annuity rate pays ₹3.5 lakh a year, about ₹29,167 a month.
Annuity Calculator
The monthly pension a lump sum buys at an annuity rate, after tax and inflation, compared with a withdrawal plan.
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Rules as of tax year 2026-27. Written by the Welthr team; last reviewed on . Not financial advice.