NPS, PPF and EPF are three of the most common retirement savings vehicles in India. They are often compared as if you must choose one, but they serve different purposes and have different tax, liquidity and risk profiles.
This guide compares them side by side, shows what a ₹10,000 monthly contribution can grow to in each, and explains how salaried and self-employed investors can combine them.
Quick comparison
NPS vs PPF vs EPF at a glance
| Feature | NPS (Tier 1) | PPF | EPF |
|---|---|---|---|
| Who can join | Resident Indians, NRIs, minors via NPS Vatsalya | Resident Indians | Salaried employees |
| Return | Market-linked | Fixed, reviewed quarterly | Fixed, reviewed annually |
| Typical assumed return | 8–10% (equity-heavy) | 7.1% | 8.25% |
| Lock-in | Until age 60 | 15 years | Until retirement/withdrawal |
| Tax on returns | Taxed at withdrawal/annuity | Tax-free (EEE) | Tax-free after 5 years of service |
| Liquidity | Limited partial withdrawal | Loan and partial withdrawal after specified years | Partial withdrawal for specific needs |
| Risk | Market risk | Very low | Very low |
The returns shown are illustrative, not guarantees. NPS returns depend on the chosen scheme and asset mix; PPF and EPF rates are set by the government and can change.
EPF: the salaried default
If you are a salaried employee, EPF is usually automatic. You contribute 12% of basic salary, and your employer contributes 12%, of which 8.33% goes to the Employees' Pension Scheme and the rest to EPF. The interest rate is declared annually; recent rates have been around 8.25%.
- Employer and employee contributions both build the corpus.
- Interest is tax-free after five years of continuous service.
- Partial withdrawal is allowed for housing, medical, education and other specified needs.
- Voluntary Provident Fund (VPF) lets you contribute more at the same rate.
- Contributions above the statutory limit can attract tax on interest; check the current rules.
EPF is a strong base because it is forced savings, low-cost and tax-efficient. The limitation is that you cannot choose the asset allocation, and the corpus may not be enough on its own for a long retirement.
PPF: safety and tax-free returns
PPF is a 15-year government savings scheme with a fixed interest rate, currently 7.1%. Contributions qualify under Section 80C in the old tax regime, interest is tax-free, and maturity proceeds are tax-free. The 15-year term can be extended in five-year blocks.
- Maximum contribution is ₹1.5 lakh per financial year.
- Loan against PPF is available from the third to the sixth year.
- Partial withdrawal is allowed after the sixth year, subject to limits.
- The account can be extended with or without further contributions.
- The interest rate is reviewed every quarter, though it has been stable for years.
PPF is ideal for conservative investors and for stabilising a retirement portfolio. Its long lock-in is the price of a safe, tax-free return.
NPS: market-linked retirement savings
The National Pension System is a market-linked retirement account regulated by PFRDA. You choose an asset allocation between equity, corporate bonds, government securities and alternative assets, or select an auto-choice lifecycle fund.