Compare NPS, EPF, and PPF for retirement planning. Understand returns, taxation, liquidity, and which combination works best for your retirement corpus.
NPS, EPF, and PPF are India's three main retirement savings vehicles. Each has different rules, returns, and tax treatment.
Which should you prioritize? Should you use all three? Here's a comprehensive comparison to help you decide.
Quick Comparison
| Feature |
NPS |
EPF |
PPF |
| Returns |
8-12% (variable) |
8.25% (fixed) |
7.1% (fixed) |
| Risk |
Market-linked |
Low (fixed rate) |
Zero (govt guaranteed) |
| Lock-in |
Till 60 |
Till retirement |
15 years |
| Tax on contribution |
80CCD(1) + 80CCD(1B) |
80C |
80C |
| Tax on maturity |
60% tax-free |
Tax-free (conditions) |
Tax-free |
| Compulsory |
No (voluntary) |
Yes (for employees) |
No (voluntary) |
Calculate your retirement corpus: Use our NPS Calculator and PPF Calculator.
Detailed Comparison
Returns Comparison
| Investment |
Current Rate |
10-Year Average |
Variability |
| NPS (Equity) |
10-14% |
11-12% |
High |
| NPS (Corporate Bond) |
8-10% |
9% |
Moderate |
| NPS (Govt Securities) |
7-9% |
8% |
Low |
| EPF |
8.25% |
8.5% |
Very Low |
| PPF |
7.1% |
7.8% |
Very Low |
NPS with high equity allocation offers highest potential returns but with more variability.
₹10,000/Month for 25 Years
| Investment |
Expected Return |
Corpus |
Difference |
| NPS (70% equity) |
11% |
₹1.24 Cr |
+₹46 L |
| EPF |
8.25% |
₹95 L |
+₹17 L |
| PPF |
7.1% |
₹78 L |
Baseline |
NPS can create 60% more wealth than PPF over 25 years.
Tax Treatment Comparison
Contribution Phase
| Investment |
Section |
Limit |
Extra Benefit |
| NPS |
80CCD(1) |
₹1.5 L (within 80C) |
80CCD(1B): ₹50K extra |
| EPF |
80C |
₹1.5 L |
Employer contribution not taxed |
| PPF |
80C |
₹1.5 L |
None |
NPS offers additional ₹50,000 deduction over EPF and PPF.
Withdrawal Phase
| Investment |
Lumpsum |
Annuity/Interest |
Special Rules |
| NPS |
60% tax-free |
Taxable (annuity) |
40% must buy annuity |
| EPF |
Tax-free* |
Interest tax-free |
*If 5 years service |
| PPF |
Tax-free |
Tax-free |
EEE status |
PPF has best exit taxation (EEE)—exempt at all stages.
Tax Efficiency Ranking
| Investment |
Contribution |
Growth |
Withdrawal |
Overall |
| PPF |
Exempt |
Exempt |
Exempt |
Best |
| EPF |
Exempt |
Exempt |
Exempt* |
Best* |
| NPS |
Exempt |
Exempt |
Partially taxable |
Good |
*EPF is EEE only with conditions (5 years service, contributions within limits).
Liquidity and Flexibility
Withdrawal Rules
| Investment |
Before Maturity |
Partial Withdrawal |
Loan |
| NPS |
25% for specific needs |
After 3 years (max 3 times) |
No |
| EPF |
For housing, medical, education |
Yes, with conditions |
No |
| PPF |
After 7 years (50% of Y5 balance) |
Limited |
Yes (Y3-Y6) |
Liquidity Ranking
| Investment |
Ease of Access |
Flexibility |
| EPF |
Moderate (employer involved) |
Good for emergencies |
| PPF |
Low (7-year wait) |
Loan option helpful |
| NPS |
Low (specific purposes only) |
Least flexible |
Who Should Prioritize What?
Salaried Employees
| Priority |
Investment |
Reason |
| 1 |
EPF |
Already mandatory, employer matches |
| 2 |
NPS (80CCD 1B) |
Additional ₹50K tax benefit |
| 3 |
PPF |
If 80C not exhausted |
Self-Employed
| Priority |
Investment |
Reason |
| 1 |
NPS |
Best tax benefits (₹2 L possible) |
| 2 |
PPF |
Guaranteed, tax-free returns |
| 3 |
VPF |
N/A (no employer) |
Risk-Averse Investors
| Priority |
Investment |
Reason |
| 1 |
PPF |
Guaranteed returns, zero risk |
| 2 |
EPF |
Stable, employer contribution |
| 3 |
NPS (low equity) |
Only if tax benefit needed |
Growth-Seeking Investors
| Priority |
Investment |
Reason |
| 1 |
NPS (75% equity) |
Highest return potential |
| 2 |
EPF (mandatory) |
Stable base |
| 3 |
PPF |
Safety component |
Optimal Combination Strategies
Strategy 1: Maximize Tax Benefits
| Investment |
Amount |
Tax Benefit |
| EPF (mandatory) |
12% of salary |
80C |
| NPS |
₹50,000 |
80CCD(1B) |
| PPF/ELSS |
Remaining 80C |
80C |
Total 80C + 80CCD(1B): ₹2 L deduction
Strategy 2: Balanced Retirement Portfolio
| Investment |
Allocation |
Purpose |
| EPF |
As mandated |
Stable base (8.25%) |
| NPS (70% E) |
₹50K-2L/year |
Growth component |
| PPF |
₹1.5 L/year |
Guaranteed, tax-free |
Strategy 3: Maximum Growth
| Investment |
Approach |
Expected Return |
| EPF |
Minimum (don't opt for VPF) |
8.25% |
| NPS |
Maximum with 75% equity |
11% |
| PPF |
Skip or minimum |
7.1% |
Rationale: Concentrate in NPS for highest equity exposure.
Strategy 4: Maximum Safety
| Investment |
Approach |
Expected Return |
| EPF + VPF |
Maximize |
8.25% |
| PPF |
₹1.5 L/year |
7.1% |
| NPS |
Skip or minimal (for 1B only) |
- |
Rationale: Avoid market risk entirely.
Age-Based Recommendations
Age 25-35
| Investment |
Allocation |
Why |
| EPF |
Mandatory (12%) |
Base |
| NPS (75% equity) |
₹50K-1L/year |
Growth, tax benefit |
| PPF |
Optional |
If surplus after equity investments |
Age 35-45
| Investment |
Allocation |
Why |
| EPF |
Mandatory (12%) |
Base |
| NPS (60% equity) |
₹1-2L/year |
Balanced growth |
| PPF |
₹1-1.5L/year |
Diversification |
Age 45-55
| Investment |
Allocation |
Why |
| EPF |
Mandatory (12%) |
Base |
| NPS (40% equity) |
₹1-2L/year |
Moderate risk |
| PPF |
₹1.5L/year |
Capital protection |
Age 55+
| Investment |
Allocation |
Why |
| EPF |
Mandatory |
Base |
| NPS (25% equity) |
If continuing |
Conservative |
| PPF |
Extend if possible |
Tax-free growth |
Employer Contribution Factor
EPF Advantage
| Component |
Employee |
Employer |
| EPF contribution |
12% of basic |
3.67% to EPF |
| EPS contribution |
0% |
8.33% to pension |
| Effective contribution |
12% |
12% |
EPF includes employer match—effectively doubles your contribution.
NPS Advantage (If Employer Contributes)
| Component |
Benefit |
| Employer NPS (up to 10% of salary) |
80CCD(2) deduction |
| No upper limit |
Additional tax benefit |
Some employers offer NPS—this is above 80C limit.
Corpus Comparison: Real Scenarios
Scenario 1: ₹50,000 Monthly Salary, 30 Years
| Investment |
Monthly Contribution |
Corpus at 60 |
| EPF (12% + 12%) |
₹12,000 |
₹2.28 Cr |
| NPS (₹2L/year, 70% E) |
₹16,667 |
₹2.08 Cr |
| PPF (₹1.5L/year) |
₹12,500 |
₹1.03 Cr |
Scenario 2: Combined Portfolio (Same Salary)
| Investment |
Contribution |
Corpus |
| EPF |
₹12,000/month |
₹2.28 Cr |
| NPS |
₹4,167/month (₹50K/year) |
₹52 L |
| PPF |
₹6,250/month (₹75K/year) |
₹52 L |
| Total |
₹22,417/month |
₹3.32 Cr |
The EEE vs EET Debate
What It Means
| Status |
Contribution |
Growth |
Withdrawal |
| EEE (PPF, EPF) |
Exempt |
Exempt |
Exempt |
| EET (NPS) |
Exempt |
Exempt |
Taxable (40% annuity) |
Does It Matter?
| Investment |
Tax Advantage |
Return Advantage |
Net Advantage |
| PPF (EEE, 7.1%) |
Best tax |
Lower returns |
Moderate |
| NPS (EET, 11%) |
Partial tax on exit |
Higher returns |
Better for most |
NPS higher returns often outweigh the partial tax on exit.
Example: ₹50K/Year for 25 Years
| Investment |
Corpus |
Tax on Exit |
Net Amount |
| PPF (7.1%) |
₹26 L |
₹0 |
₹26 L |
| NPS (11%, 60% free) |
₹52 L |
~₹3.5 L on annuity |
~₹48.5 L |
NPS creates nearly 2x wealth despite partial taxation.
Common Mistakes
1. Ignoring NPS 80CCD(1B)
| Mistake |
Cost (30% bracket) |
| Not using ₹50K 80CCD(1B) |
₹15,600/year tax loss |
| Over 25 years |
₹3.9 L + opportunity cost |
2. VPF When NPS Available
| Option |
Return |
Tax Benefit |
| VPF |
8.25% |
Within 80C |
| NPS |
8-12% |
80CCD(1B) additional |
NPS often better than VPF for additional retirement savings.
3. PPF Over NPS for Young Investors
| Age 25 Investor |
PPF (7.1%) |
NPS (11%) |
| ₹1 L/year, 35 years |
₹1.38 Cr |
₹3.41 Cr |
NPS can create 2.5x more with higher equity allocation.
Decision Framework
Choose NPS If
| Criteria |
Check |
| Want highest growth potential |
✓ |
| Need extra tax benefit (80CCD 1B) |
✓ |
| Comfortable with equity risk |
✓ |
| Don't need liquidity before 60 |
✓ |
| Self-employed |
✓ |
Choose EPF/VPF If
| Criteria |
Check |
| Want stable, guaranteed returns |
✓ |
| Have employer contribution |
✓ |
| Value liquidity for emergencies |
✓ |
| Risk-averse |
✓ |
| Want simpler taxation |
✓ |
Choose PPF If
| Criteria |
Check |
| Want zero market risk |
✓ |
| 80C not exhausted |
✓ |
| Value complete tax exemption |
✓ |
| Need loan facility |
✓ |
| Self-employed without NPS interest |
✓ |
Conclusion
| Factor |
Winner |
| Returns |
NPS (with equity) |
| Tax efficiency |
PPF (EEE status) |
| Safety |
PPF/EPF |
| Flexibility |
EPF |
| Additional tax benefit |
NPS (80CCD 1B) |
| Employer contribution |
EPF |
Optimal approach for most:
- EPF: Accept the mandatory contribution (free employer match)
- NPS: Add ₹50K-2L (80CCD 1B benefit + higher returns)
- PPF: Add if 80C space remains or want guaranteed component
All three have a role in retirement planning. The key is understanding each one's strengths and allocating accordingly.
Plan your retirement: Use our NPS Calculator and PPF Calculator to model different scenarios.
