EPF vs PPF vs NPS: Which Retirement Account Does What

If you work for a company in India, you probably already own one of these three. Your payslip has an EPF line. A colleague mentioned NPS. Your father insists you open a PPF.

They look similar because all three are long-term, government-linked and tax-friendly in some way. But they solve different problems. This guide explains what each one does, so you can decide how to use them together.

Check the current rates and rules on the official sites before acting. They change.

The Employees' Provident Fund is deducted from your salary automatically if your company is registered. Typically 12% of your basic pay goes in from you, and the employer adds a matching amount (part of which goes to the pension scheme).

What's good

• It is automatic, so you save without thinking.
• The rate has been higher than most fixed-income options. 8.25% for FY 2025-26.
• It is backed by the government's framework and has very low risk.

What to watch

• Don't withdraw it when you switch jobs. Transfer it to your new employer's account through your UAN. Withdrawing resets the compounding and may attract tax if you withdraw before five years of continuous service.
• Interest on employee contributions above a yearly limit is taxable.
• Your Universal Account Number (UAN) should be linked to your Aadhaar and bank account so you can claim and transfer online.

Think of EPF as your base retirement layer. You don't choose it, but you should check it, once a year, at the EPFO member portal.

The Public Provident Fund is a savings scheme run by the government through banks and post offices.

• Tenure: 15 years, extendable in blocks of 5.
• Limit: ₹500 minimum and ₹1.5 lakh maximum per financial year.
• Return: set by the government each quarter, and has been 7.1% for several years when I checked.
• Withdrawal: partial withdrawals from the 7th year, with loan facilities in earlier years.

What's good

• The interest is fixed by the government and safe.
• Under the old tax regime, deposits count towards the ₹1.5 lakh 80C limit. Interest and maturity amount are tax-free in both regimes under current rules.
• It teaches discipline. The lock-in stops you from dipping into it.

What to watch

• 15 years is a long time. Don't put in money you may need earlier.
• Over long periods, equity funds have historically beaten PPF, though with ups and downs. PPF is for the stable part of your portfolio.
• Deposit before the 5th of the month to earn that month's interest. Check the exact rule with your bank.

The National Pension System is a retirement scheme regulated by PFRDA. You pick a mix of equity, corporate bonds and government securities (or choose an auto mode that reduces equity as you age).

What's good

• Low fund management costs compared to many mutual funds.
• An extra deduction of ₹50,000 under 80CCD(1B) in the old regime.
• Employer's NPS contribution is deductible even in the new regime, up to the limit in the law. If your company offers it, this is one of the few remaining tax breaks in the new regime.
• You can hold a market-linked asset without having to manage it.

What to watch

• Lock-in until 60. Early partial withdrawals are allowed only for specific reasons and amounts.
• At retirement, part of the corpus must be used to buy an annuity (a pension), and the rest can be taken as a lump sum. Rules have been relaxed in recent years, so check the current ones.
• Returns are not guaranteed.

Here's a way to think of them as layers:

1. EPF: compulsory base. You do nothing but check it.
2. PPF: the safe, long-term bucket if you want guaranteed returns and don't mind the lock-in.
3. NPS: a disciplined, locked-in equity and debt mix for retirement, useful especially if your employer contributes.
4. Equity mutual funds: for growth with liquidity, started through a SIP.

A simple example for a 28-year-old who earns ₹12 lakh a year:

• EPF runs automatically.
• ₹2,000 a month into a PPF for safe, tax-free growth.
• ₹10,000 a month into an index fund SIP for growth.
• Ask HR whether the employer can contribute to NPS from the CTC, which could save tax in the new regime.

This isn't a prescription. It shows how the pieces differ, so you can choose a mix that matches how much risk you can handle.

Before you contribute for the tax break, check which regime you're in. Under the new regime, 80C and 80CCD(1B) deductions don't apply. Under the old regime, they do. Old vs new tax regime shows how to compare.

If the new regime wins for you, contribute to PPF and NPS only if you want the product itself, not for the deduction.

• Cashing out EPF on every job change. It breaks compounding and the tax rules.
• Opening a PPF and not funding it. Missing the yearly minimum makes the account inactive and you must pay a penalty to revive it.
• Choosing NPS only for the tax break and then being surprised by the lock-in.
• Ignoring inflation. A fixed-return product that earns 7% when prices rise 5% to 6% gives a small real return. Mix in growth assets for goals 10+ years away.
• No nominee. Update the nominee on all three accounts.

Yes. They are separate and can run together.

There's no single best. EPF is the base, PPF is for safety, NPS is for disciplined retirement saving with market exposure. Your mix depends on risk tolerance and tax regime.

You can keep the account and interest continues for a limited period under the rules. Check the current EPFO rules on withdrawal after job loss.

Under current rules, PPF interest and maturity proceeds are exempt, within the yearly deposit limit. Confirm the current position before you plan around it.

Yes. These accounts lock your money. Build an emergency fund first.

Rates, limits and rules are as of October 2026 and change with notifications and Budgets. This article is educational, not investment or tax advice.