Financial planning: Planning for your retirement must take into consideration rising costs, future medical and emergency needs, and lifestyle inflation. Thus, it is advisable to have some allocation towards secure and long-term investment options such as the public provident fund (PPF), employees provident fund (EPF) and the national pension scheme (NPS).
Launched by the Government of India, , EPF and NPS are schemes with tax-free payout and higher rate of interest compared to bank fixed deposits or recurring deposits (FDs or RDs). They are reliable and safe instruments for conservative investors seeking consistent long-term returns and income tax benefits.
Public Provident Fund (PPF): All you need to know
PPF is a government backed savings scheme, with guaranteed tax-exemption on , maturity amount and interest earned (aka EEE benefit), at a fixed interest rate of 7.1% this quarter. It is among the safest investment options for retirement and tax planning in India.
A PPF account is offered by any India Post office or public bank (i.e. of India, Canara Bank, Punjab National Bank) and some private lenders, for a minimum deposit of ₹100-500 each month.
It has a know-your-customer (KYC) requirement where you will need to submit the duly filled form with your Card copy, proof of residence, and a passport size photo at the bank or post office. You can also directly open a PPF account through your bank through online banking or mobile banking.
A total of ₹1.5 lakh annual contribution is exempt under Section 80C of the old tax regime. There is no similar benefit at present under the new tax regime.
Employees Provident Fund (EPF): Key Highlights
EPF is administered by the Employees’ Provident Fund Organisation () under the EPF Act of 1952. While PPF is available to all Indian citizens, EPF is a retirement savings scheme available to the salaried class only. Eligibility includes the mandatory enrolment of salaried individuals with basic pay and dearness allowance of up to ₹15,000. You can also opt for voluntary contribution if basic pay and dearness allowance (DA) exceed Rs15,000 per month.
It functions through joint contributions from both the employer and employee, wherein you receive the lumpsum corpus at retirement. The current interest rate of 8.25% per annum — higher than PPF and same as VPF.
Notably, employee contributions up to ₹1.5 lakh annually are exempt under Section 80C of the . While employers’ up to 12% contribution (below ₹7.5 lakh) is exempt under the old and new tax regimes. There is no similar benefit at present under the new tax regime.
Further, for employees, interest on accumulated contribution up to ₹2.5 lakh is tax-free, while interest on the employer’s contribution is tax-free.
National Pension Scheme: Top things to know
NPS is open to all Indian citizens between 18-70 years of age, except for those in the armed forces. After , account holders can choose to withdraw a certain percentage of their corpus as lumpsum and use the rest as pension. There are two types of accounts to choose:
- Tier-1 has minimum deposit of ₹500, with some restrictions over withdrawal. It has annual tax exemption of up to ₹2 lakh ( ₹1.5 lakh + ₹50,000 additional) under Section 80CCD of the Income-Tax Act.
- Tier-2 has ₹250 minimum deposit and requires the individual to already have an active Tier-1 NPS account.
Each subscriber is assigned a Permanent Retirement Account Number (PRAN) through which all contribution and fund management activities are conducted. It also has a know-your-customer (KYC) requirement.
NPS is market-linked and can provide between 9-12% return depending on your allocation. It allows multiple opportunities of partial withdrawal and the full withdrawn on maturity is tax free. Notably, has to be purchased after tax.
Check comparison between PPF vs EPF vs NPS
(All rates are as mentioned on the respective bank’s official website, at time of writing on 26 March 2026)
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.