NPS vs. PPF vs. EPF: Which One Is Right for Your Retirement?

Selecting the right instrument is a crucial step when you are thinking about retirement plans. Among the long-term savings options, many Indians consider three main choices: National Pension System (NPS), Public Provident Fund (PPF), and Employee Provident Fund (EPF). Each comes with different advantages and structures. So, when should you choose one over the other?

Integrated helps people forecast their future into economic freedom and peace of mind. Our iInvest application helps initiate working on retirement products or comparing, investing in, and managing different ones according to income, goals, and lifestyle.

Understanding the Basics

• The EPF is a retirement benefit scheme for salaried employees in the organized sector. Contributions are made by both employer and employee, and the accumulated corpus earns a fixed interest rate decided annually.
• The PPF, on the contrary, is a government-based scheme available to any Indian citizen and promises tax-free returns with a 15-year lock-in, which makes it fit for conservative investors.
• The NPS is a market-linked pension product allowing equity, corporate debt, and government securities investment. It is a flexible and transparent scheme for salaried and self-employed persons alike wishing to build a retirement corpus.

Why Consider NPS?

What makes NPS good is the low-cost structure, professional fund management, and tax employee advantages. You can create an NPS account online within minutes, using an application like iInvest, and begin your investment early.

NPS also offers the facility to set up SIPs, which could bring the discipline of regular investments, much like that in mutual funds, into your retirement planning. This makes it especially suitable for those seeking long-term compounding coupled with managed exposure to equity.

Tax Benefits Comparison

These options involve tax benefits, yet they considerably differ from one another:

• EPF and PPF fall under the EEE category (Exempt-Exempt-Exempt), meaning contributions, interest, and withdrawals are tax-free, subject to conditions.
• NPS offers additional tax benefits under the old tax regime:
  • ₹50,000 extra under Section 80CCD(1B)
  • Employer contributions: up to 10% of salary for private and 14% for government employees under Section 80CCD(2) over the limit of ₹1.50 lakh provided under Section 80 CCE.
• Under the new tax regime, only employer contributions to NPS (up to 14% of salary) are tax-deductible. This makes NPS less beneficial for self-employed individuals but still attractive for high earners with employer support.

Making the Right Choice

• EPF is generally enforceable for everyone with a salary, so it stands as a good fixed income base.
• PPF is suitable for conservative investors with long-term horizons.
• NPS is generally a better option for building a higher corpus with more flexibility and optional annuity benefits.

At Integrated, the advisors help the client select the best pension fund for NPS based on their age, risk profile, and retirement goals, and with the iInvest app, it is free and easy to compare schemes, track performance, and make swift decisions—all in one place.

Conclusion

Each retirement plan (EPF, PPF, and NPS) has its own merits to commend it. The right one would be contingent upon your employment status, risk preference, and view of life on a long horizon. However, with increasing inflation and life expectancy, putting your faith in one may prove insufficient.

In this scenario, NPS stands out as a more dynamic option, offering market-linked returns and greater flexibility to potentially outpace inflation and build a larger corpus for a longer post-retirement life.

Explore your options using the iInvest app, and allow Integrated to help you determine the best retirement structure that suits your future. If you seek safety, growth, or a blend of both. Now is the moment to take control of your retirement planning.