Side by side
| EPF | PPF | NPS | |
|---|---|---|---|
| Who can open | Salaried, automatic | Anyone | Anyone 18 to 70 |
| Typical return | Around 8%, declared yearly | Around 7.1%, set quarterly | Market linked, equity capped |
| Lock-in | Until job exit, partial advances allowed | 15 years, partial from year 7 | Until age 60 |
| Maturity tax | Tax free after 5 years service | Fully tax free | 60% tax free, 40% must buy annuity |
| Extra deduction | Within 80C | Within 80C | ₹50,000 extra under 80CCD(1B) |
| Risk | Very low | Sovereign, very low | Market risk on the equity portion |
The row that decides it for most people is the second from last. NPS forces 40 percent of your corpus into an annuity at 60, and annuity rates in India have generally been unexciting, with the income taxable at your slab. That single constraint is why NPS works better as a tax-deduction layer on top than as your primary retirement vehicle.
A sensible order
- First, EPF, because it is automatic, the employer matches it, and around 8 percent tax-free is not available anywhere else at that risk level.
- Second, PPF, up to ₹1.5 lakh a year. Fully tax-free maturity and open to anyone, which matters if you freelance.
- Third, NPS, specifically for the extra ₹50,000 under 80CCD(1B), which sits on top of the ₹1.5 lakh 80C ceiling. At the 30 percent slab that deduction alone is worth about ₹15,600 a year.
- Fourth, index funds for everything else, because none of the three above will beat equity over thirty years and none of them let you reach the money before the rules say so.
Frequently asked
PPF for flexibility and certainty, NPS for the extra ₹50,000 deduction and equity exposure. PPF matures fully tax-free after 15 years and you can access part of it from year seven. NPS locks money until 60 and forces 40 percent into an annuity, which is why most people treat it as a supplement rather than a replacement.
What to do next
- Check which tax regime you are in before choosing an account for its deduction.
- Get EPF and PPF working first, then add NPS for the extra ₹50,000 only.
- Anything beyond these three belongs in index funds, where you can actually reach it.
