NPS vs PPF vs EPF: Selecting the right investment vehicle is essential when planning for retirement. In India, three popular options with distinct advantages and features are the Public Provident Fund (PPF), National Pension System (NPS), and Employees' Provident Fund (EPF). However, there is no one-size-fits-all strategy. Choosing between the NPS, PPF, and EPF depends on the individual's financial goals and risk tolerance. Financial experts recommend starting retirement investments at a young age—the earlier, the better—to experience the power of compounding.
Designed by the government, the PPF is a savings plan that currently offers a return of 7.1 per cent. It provides a fixed, tax-free return with a sovereign guarantee, ideal for risk-averse investors.
“PPF's 15-year lock-in period can be broken into five years. Under Section 80C of the Income Tax Act, contributions up to ₹1.5 lakh annually are qualified for tax reductions. This is a tax-efficient investment choice since the interest gained and the maturity funds are tax-free. Given government support, the PPF is renowned for its stability and safety," said Dr. Ravi Singh, SVP — Retail Research, Religare Broking Ltd.
The Employees' Provident Fund Organisation (EPFO) manages the EPF, a retirement benefit system for salaried workers. The company and the employee contribute 12% of the base pay and dearness allowance to the EPF account.
EPFO has announced the interest rate for the financial year 2023-24, setting it at 8.25%.
«EPF is mandatory for salaried employees. It offers fixed returns with tax benefits and employer contributions, offering a balanced approach,» said Edul Patel, CEO of Mudrex
The NPS is a government-sponsored pension plan designed to yield retirement
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