Deferred annuity / pension IRR calculator
Estimate the annualized return on a pension plan — a simplified approximation, not actuarial pricing.
Last reviewed: August 2026 · Figures are estimates for general planning only — see the explanation below for this calculator's specific assumptions.
starting at age 40, paying ₹1,00,000 a year for 10 years and receiving ₹15,000 a year in retirement, this works out to an effective annual return of about 1.20% over an assumed 21 years of payouts. Compare this against NPS as a retirement option
Important: this is a simplified approximation, not actuarial pricing
Real annuity pricing uses a full mortality table to probability-weight every possible age of death. This calculator instead assumes one fixed "assumed age at death" that you choose — by default the overall population average life expectancy (around 71–72 years in recent estimates), though annuitants as a group tend to live somewhat longer than the general population, so you may want to enter a higher age. Adjust it to see how sensitive the IRR is to this assumption — that sensitivity is itself useful information. This does not replace the illustration your insurer provides.
How it works
You pay a fixed annual premium for a set number of years. Starting the year after premiums end, you receive an annual payout for as many years as the assumed lifespan implies, plus an optional lumpsum in the death year (many Indian pension plans return the total premiums paid as a death benefit). The calculator solves for the single annualized rate (IRR) that reconciles all these cash flows.
What does "IRR" mean?
IRR (Internal Rate of Return) is just the annual growth rate that would explain the numbers you put in and get out — similar in spirit to an interest rate, but for a stream of payments in and out over time rather than a single lump sum.
Frequently asked questions
Why does this use one assumed death age instead of a real mortality table?
A true actuarial IRR probability-weights the payout across every possible age of death using a mortality table, which is what insurers use to price these products. This calculator uses a single assumed age instead, as a simpler approximation — try a few different assumed ages to see how much the result shifts before treating the number as a firm expectation.
Should I use general population life expectancy or something higher?
People who buy annuities tend to live somewhat longer than the general population on average (a pattern actuaries call selection effect), so using general life-expectancy figures as your assumed death age will tend to understate the real IRR — consider testing a few years higher than the population average.
Common questions answered
- What IRR does a ₹40,000/year pension plan give over 18 years?
- What is the IRR of a ₹1.2 lakh/year pension plan over 14 years?
- Is a ₹1 lakh/year pension plan for just 8 years worth it?
- What IRR does a ₹1.1 lakh/year pension plan give over 11 years?
- What is the IRR of a short 5-year pension plan paying ₹2 lakh/year?
- Is a ₹15,000/year small pension plan for 30 years worth it?