What Is EPF?
Employees' Provident Fund (EPF) is mandatory for most salaried employees in covered establishments. You and your employer contribute 12% of Basic+DA. EPF offers fixed, government-declared returns (~8.15% p.a.), tax benefits under 80C, and tax-free withdrawal after 5 years. It's low-risk, employer-matched, and forms the backbone of retirement savings for salaried Indians. EPF is linked to employment—when you change jobs, you transfer it.
What Is PPF?
Public Provident Fund (PPF) is a voluntary, government-backed scheme open to all Indian residents. You can invest ₹500–₹1.5 lakh per year. It has a 15-year tenure (extendable in blocks of 5 years), offers fixed returns (currently ~7.1% p.a.), and is fully tax-free. PPF is ideal for conservative investors who want a safe, long-term option outside of employment. It's not linked to your job—you can continue PPF even if you're self-employed or between jobs.
What Is NPS?
National Pension System (NPS) is a market-linked retirement scheme. You choose an asset mix (equity, debt, government securities). Returns depend on market performance—historically 9–12% for equity-heavy allocation. NPS offers tax benefits: 80C (₹1.5L), 80CCD(1B) (₹50K extra), and 80CCD(2) for employer contribution. At 60, 60% can be withdrawn tax-free; 40% must go to annuity (pension). NPS suits those who want higher return potential and can tolerate market risk. It's open to salaried and self-employed.
Key Takeaways
- EPF: Mandatory for salaried, 8.15%, employer match, low risk. Base for most.
- PPF: Voluntary, 7.1%, 15-yr lock-in, safe. For non-salaried or extra savings.
- NPS: Market-linked, 9–12% potential, tax benefits. For higher growth, more risk.
- Best approach: Use all three: EPF base + PPF/NPS for additional corpus.
- No single best: Depends on employment, risk tolerance, and tax situation.
Comparison Table
📊 EPF vs PPF vs NPS at a glance
When to Use Each
- EPF: You're salaried; it's automatic. Maximise by ensuring high Basic. Add VPF if you want more.
- PPF: You want extra safe savings; you're self-employed; or you've maxed EPF and want more tax-free
- NPS: You want market-linked growth; you can take equity risk; you want 80CCD(1B) ₹50K benefit
Can You Use All Three?
Yes. Many salaried professionals use EPF (mandatory) + PPF (voluntary safe) + NPS (voluntary growth). EPF builds the base. PPF adds a safe, independent corpus. NPS adds growth potential with tax benefits. The 80C limit of ₹1.5L is shared—EPF+PPF+NPS Tier I all count. So if EPF is ₹1.2L, you have ₹30K for PPF or NPS under 80C. NPS has an additional ₹50K under 80CCD(1B), which doesn't count in the ₹1.5L limit. Plan the mix based on risk tolerance and tax optimisation.
Use Our Calculators
EPF Calculator: Project EPF balance. NPS Calculator: Estimate NPS corpus. Retirement Planner: Combine EPF + PPF + NPS + other sources for a full retirement plan.
Disclaimer
Returns and rules are subject to change. Verify with EPFO, banks (PPF), and PFRDA (NPS). Consult an advisor for your situation.