EPF vs PPF vs NPS: Where Should Your Retirement Money Go?

All three are tax-advantaged retirement instruments. All three are legitimate. The decision depends on your timeline, liquidity needs, and contribution flexibility.

EPF — The Default

If you are salaried, EPF is automatic. 12% of your basic + employer contribution. Interest rate: 8.15% (FY 2024-25, declared annually). Fully EEE within limits.

Key point: Never skip VPF (Voluntary Provident Fund) if you are in a high tax bracket and want more debt exposure. VPF earns the same 8.15% tax-free with no upper limit on contribution.

PPF — The Safe Compounder

7.1% interest, reviewed quarterly, fully EEE. ₹500 minimum, ₹1.5L maximum per year. 15-year lock-in (extendable in 5-year blocks). Loan facility from 3rd year.

For someone in the 30% bracket, PPF's 7.1% tax-free is equivalent to a pre-tax return of ~10.1%. That beats most FDs and comparable to short-term debt funds.

NPS — The Long-Term Accumulator

Additional ₹50K deduction under Section 80CCD(1B) makes NPS attractive in the old regime. In the new regime, this deduction is lost — but NPS is still a low-cost, market-linked retirement product.

Equity allocation up to 75% until 50, tapering to 50% at 60. Annuity requirement at maturity: 40% must go to annuity (taxed), 60% is tax-free lump sum.

The Allocation Framework

1. Max EPF (employer match = instant 100% return on that portion)
2. VPF if you want more guaranteed debt exposure
3. PPF ₹1.5L/year — 15-year compounder
4. NPS if in old regime for the ₹50K deduction
5. ELSS/equity for remaining equity allocation