NPS VS PPF – Which is Better Option for Investing?

Written By: Manish Sharma

Last Updated: July 9, 2021

Category : Investment
Nps Vs Ppf

National Pension Scheme (NPS) and Public Provident Fund (PPF) are the two best options for your retirement investment. But which one should you choose? We will help you find out.

National Pension Scheme (NPS)

National Pension Scheme (NPS) is a comprehensive scheme under which the employee and the employer both contribute towards saving for retirement. This scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA).

Features of National Pension Scheme (NPS):

  1. Employees of Central Government, State Government, PSU's, Banks and Insurance companies can join NPS.
  2. The employee can join the scheme through a private sector bank or any other financial institution authorized by PFRDA.
  3. It is a flexible scheme and allows easy portability.
  4. The EPFO offers several schemes under NPS: Tier I, Tier II, and Tier III.
  5. 5. The employee contributes 12% of basic salary and the employer contributes 8.33% of basic salary as a subscription to the NPS / Tier I account.

Public Provident Fund (PPF)

Public Provident Fund (PPF) is a government-sponsored retirement saving scheme. This scheme is administered by the National Saving and Provident Fund Organisation(NSF), which manages the retirement and pension-related schemes under the "National Pension System".

Features of Public Provident Fund (PPF):

  1. It is a debt-oriented scheme.
  2. The investment in PPF is not taxable on withdrawal or maturity.
  3. It offers tax deduction under Section 80C of the Income Tax Act, 1961 for a maximum amount of Rs 150,000 ($2500) per annum, subject to a maximum limit of Rs 1.
  4. The maximum annual investment in PPF is limited to Rs. 1.5 lakh.
  5. It offers a partial or full withdrawal facility before maturity with three months' notice.

Difference Between NPS and PPF (NPS vs PPF)

NPS and PPF are long-term investments. Here are few differences between them.

  1. An Individual aged between 18-65 can invest in NPS, whereas there's no age restriction in PPF.
  2. PPF is a debt scheme whereas NPS is a pension fund.
  3. NPS requires a minimum monthly investment of Rs 100/- while PPF requires only Rs 500/- per month.
  4. There's a maximum investment of Rs 1,50,000 in PPF per year, whereas the investment limit in NPS is not fixed.
  5. The tenure period for PPF is 15 years while it's 5 years for NPS.
  6. PPF offers a partial or full withdrawal facility. In NPS, withdrawal is not allowed before 3 years from the date of joining the scheme.




Indian citizens & NRIs allowed

Only Indian citizens allowed

Minimum Age

18-65 years

No age restrictions

Rate of Returns

9%-12% depending on market

7.1% is fixed

Maturity Period / 


Till the age of 60 years

15 years


No Limit

Rs. 1.5 lakh / year

Which is better? NPS or PPF?

NPS and PPF are two different investment plans. You can choose one of them to invest your money in. Both NPS and PPF are great options to invest your money for retirement.

PPF is a debt-oriented scheme so it will increase the loan liability if you withdraw the money before maturity.

NPS is a pension fund so it will decrease the loan liability if withdrawal is made before maturity.

If you are looking for minimal risk. PPF is for you. NPS is riskier than PPF.

All withdrawals from the National Pension System are tax free up to 60%. The portion taken in monthly installments is 40% of that total which is taxable. The lock-in period is another variable to consider.

I hope this article will help you find out which one is a better option for Investing?

Nps Vs Ppf - Which Is Better Option For Investing?


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About the Author

I'm tech-savvy, loves to write about saving, investing and proper financial planning. Also, I am a blogger, share everything with 100% transparency and the best of my knowledge.

Manish Sharma

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