EPF, PPF, VPF & NPS — India Retirement Tools
Know the rules, tax treatment, and withdrawal options so you can integrate them into your plan.
Tax-efficientStable baseLong-term
At a Glance
| Scheme | Who | Key Features |
|---|---|---|
| EPF/EPS/VPF | Salaried | Employer+employee contributions; VPF voluntary; mostly EEE |
| PPF | All | 15-year lock-in; tax-free maturity; Govt-backed |
| NPS | All | Low-cost market-linked; 60% lump sum + 40% annuity at exit |
EPF (Employees' Provident Fund)
How to Open an EPF Account
- EPF is automatically opened by your employer when you join an EPF-registered company.
- Your employer creates your UAN (Universal Account Number) via the EPFO portal.
- You activate the UAN online using your Aadhaar-linked mobile number.
- No self-opening option — EPF is only for salaried employees under the EPF Act.
How to Contribute / Invest
- Standard contribution: 12% of basic salary + dearness allowance is deducted every month.
- Employer matches 12% (but part of their share goes to EPS pension).
- You can make Voluntary PF (VPF) contributions up to 100% of basic salary — earning same EPF interest rate.
- EPF interest is declared yearly and credited to the passbook.
PPF (Public Provident Fund)
How to Open a PPF Account
- Can be opened by any Indian resident — salaried or self-employed.
- Available through major banks (SBI, ICICI, HDFC, Axis, etc.) & India Post.
- Open online if your bank supports it, else fill form at branch + submit KYC.
- Only one PPF account per person is allowed.
How to Invest / Deposit
- Minimum ₹500 and maximum ₹1.5 lakh per financial year.
- Deposit monthly, yearly, or lump sum (max 12 installments/year).
- Use net-banking, auto-debit, UPI, or branch cash/cheque.
- Interest is compounded yearly, credited on 31 March.
NPS (National Pension System)
How to Open an NPS Account
- Open online via eNPS portal using Aadhaar + mobile OTP or PAN + bank account.
- Can also open offline at any POP-SP (bank branches, fintechs, post office).
- Two types: Tier-I (pension, locked till 60) & Tier-II (voluntary, flexible withdrawal).
- You receive a PRAN (Permanent Retirement Account Number) after registration.
How to Invest / Contribute
- Minimum yearly contribution: ₹1,000 in Tier-I (no max limit).
- Choose allocation manually (Active Choice) or Auto-Choice (based on age).
- Asset classes: Equity (E), Corporate Debt (C), Govt Bonds (G), Alternatives (A for Tier-I).
- Contribute via net-banking, UPI, debit card, or standing instructions.
Where to Open (Best Banks / Platforms)
| Product | Best Places to Open | Online? | Charges / Notes |
|---|---|---|---|
| EPF | Through your employer (EPF-registered establishments). UAN activation via EPFO portal. | UAN activation online | No account-opening choice by self; employer handles setup. VPF possible via payroll. |
| PPF | Major banks (SBI, HDFC, ICICI, Axis, Kotak, IDFC FIRST) & India Post | Yes (most banks) / Offline at branch or Post Office | 1 account per individual; deposit ₹500–₹1.5L/year; 15-year lock-in, extendable. |
| NPS | Official eNPS portal (CRA: Protean/NSDL or KFintech), or POP-SPs (banks/post offices) | Yes (eNPS) / Offline via POP-SP | Low annual charges via eNPS; Tier-I for pension (locked till 60), Tier-II flexible. |
NPS — Complete Guide (Contribution, Accounts, Allocation, Withdrawal & Tax)
The National Pension System (NPS) is a government-regulated retirement scheme that allows you to invest in equity, corporate debt, government bonds, and alternative assets, with tax benefits and market-linked growth. It is available to all Indian citizens (18–70 years).
1️⃣ Types of NPS Accounts
- Tier-I (Pension Account) — Mandatory; locked till age 60 (partial withdrawal rules apply). Minimum yearly contribution ₹1,000.
- Tier-II (Voluntary Account) — Optional, works like a flexible investment account; withdrawals anytime; no tax benefit unless Govt employees.
- Both accounts share the same PRAN (Permanent Retirement Account Number).
2️⃣ Employee vs Employer Contributions
- Self-Contribution (Individual) — You invest directly (minimum ₹500 per transaction).
- Corporate / Employer NPS — Employer can contribute up to 10% of basic + DA (or 14% for Govt employees). This contribution is exempt from tax in employee’s hands.
- Both contributions go into the same Tier-I account and grow tax-free.
3️⃣ Investment Choices & Asset Allocation
You can choose Active Choice (decide % yourself) or Auto Choice (allocation auto-adjusts with age).
| Code | Asset Class | Description | Max Allocation |
|---|---|---|---|
| E | Equity | Listed stocks & index funds | 75% (till age 50; then reduces) |
| C | Corporate Bonds | AAA/AA rated debt securities | 100% |
| G | Government Bonds | Central & state govt securities | 100% |
| A* | Alternative Assets | REITs, InvITs, etc. (Tier-I only) | 5% |
4️⃣ Life-Cycle Auto Allocation (Default Option)
If you don’t want to manage allocation manually, NPS reduces equity exposure as you age:
| Age | Equity (E) | Corporate Debt (C) | Govt Bonds (G) |
|---|---|---|---|
| Up to 35 | 75% | 10% | 15% |
| 40 | 62.5% | 15% | 22.5% |
| 50 | 50% | 20% | 30% |
| 60 | 15% | 25% | 60% |
You can switch between Active ↔ Auto twice per financial year.
5️⃣ Withdrawal Rules (Exit & Pension)
- Before age 60: Can withdraw only 20% lump sum, remaining 80% must buy annuity.
- At age 60 or later: Can withdraw 60% lump sum (tax-free), and invest remaining 40% in annuity (monthly pension).
- 100% withdrawal allowed if corpus is ≤ ₹5 lakh at age 60.
- Partial withdrawal (up to 25% of own contributions) allowed after 3 years for specific reasons: education, marriage, medical emergency, home purchase.
6️⃣ Tax Benefits
- 80C (₹1.5L limit): NPS contribution can be part of this.
- Extra ₹50,000 under 80CCD(1B): Exclusive NPS deduction, over and above 80C.
- Employer contribution: Up to 10% of basic + DA is exempt u/s 80CCD(2). Not counted in 80C limit.
- Tax on exit: 60% lump sum is 100% tax-free; annuity income is taxable as per slab.
- Tier-II: No tax benefit (except Govt employees). Gains taxed like mutual funds.
7️⃣ Key Advantages & Limitations
- ✅ Low fees (0.01%–0.09% fund management cost, cheapest in India)
- ✅ Equity + debt + gilt allocation in one product
- ✅ Extra ₹50k tax benefit over 80C makes it ideal for high earners
- ⚠️ Compulsory annuity purchase reduces flexibility
- ⚠️ Annuity income is taxable & returns are lower (5.5–7.5%)
- Fastest for NPS: eNPS with Aadhaar OTP/KYC is typically quickest end-to-end.
- Convenience for PPF: Open where you already bank (easy deposits via net-banking/UPI).
- EPF: If your employer isn’t enrolled, EPF cannot be opened individually. Consider PPF/NPS for long-term retirement savings.
EPF vs PPF vs NPS — Quick Comparison & How to Choose
| Feature | EPF | PPF | NPS (Tier-I) |
|---|---|---|---|
| Who can open? | Salaried employees in EPF-registered orgs (via employer) | Any resident individual (1 account/person) | Any Indian citizen, 18–70 (individual or corporate route) |
| Purpose | Retirement savings via employer payroll | Long-term, sovereign-backed retail savings | Pension-focused, market-linked retirement plan |
| Lock-in | Till job exit/retirement (with partial advances allowed) | 15 years (extendable in 5-year blocks) | Till age 60 (partial withdrawal rules apply) |
| Contributions | 12% basic+DA employee; employer also ~12% (VPF optional) | ₹500–₹1.5L per FY (max) | ₹1,000/yr minimum; no hard upper cap |
| Returns | Admin-declared EPF rate (stable) | Govt-declared PPF rate (quarterly, stable) | Market-linked (Equity/Corp Debt/Gilts/Alt) |
| Risk | Low–moderate | Low (sovereign-backed) | Varies with asset mix (E/C/G) |
| Tax while investing | 80C for employee; VPF under 80C | 80C up to ₹1.5L | 80C + extra ₹50k under 80CCD(1B); employer under 80CCD(2) |
| Tax on maturity | Generally EEE (subject to current rules) | EEE (principal, interest, maturity tax-free) | 60% lump sum tax-free; annuity taxable as per slab |
| Withdrawal/Exit | Partial advances; full on retirement/conditions | Partial withdrawal after 5 yrs; full at maturity | At 60: 60% lump sum + 40% annuity (or 100% if ≤₹5L) |
| Best for | Salaried seeking stable, automatic retirement build-up | Conservative long-term savers, self-employed | Tax-savvy investors wanting equity+debt in one plan |
How to Choose (Fast Rules)
- Salaried with EPF: Maximise EPF (and VPF if you want fixed-rate stability). Use NPS mainly for the extra ₹50,000 80CCD(1B) deduction. Add PPF for guaranteed, tax-free debt.
- Self-employed/professional: No EPF. Use a mix of PPF (safe base) + NPS (equity+debt with tax benefits) + equity MFs for flexibility.
- High tax slab (30%): NPS’s extra ₹50k deduction is highly efficient; consider EPF/VPF (if salaried) and PPF for EEE benefits.
- Close to retirement (55+): Prefer EPF/PPF, and if using NPS, keep equity % low (Auto/Conservative) to reduce volatility.
- Young (20s–30s): Consider higher equity via NPS (Active up to 75% in E) + EPF core + small PPF for safe debt.
Suggested Starter Mix (Illustrative, not advice)
- Salaried, age 28: EPF (as per payroll) + NPS (₹50k 80CCD1B; E 70/C 15/G 15 in Active) + PPF ₹50k/yr.
- Salaried, age 38: EPF + VPF (if target gap) + NPS (Active E 60/C 20/G 20 or Auto) + PPF ₹1.5L if you need safe bucket.
- Self-employed, age 35: PPF ₹1–1.5L + NPS (₹50k 80CCD1B; Active E 65/C 20/G 15) + diversified equity MFs.
- Near retirement, age 57: EPF/VPF as core + NPS (Auto/Conservative; G higher) + minimal fresh PPF unless extension planned.
Liquidity & Flexibility Tips
- EPF: Treat partial advances as emergency-only; VPF adds return but reduces liquidity.
- PPF: Plan deposits early in FY; consider 5-year extensions with/without contribution.
- NPS: Prefer eNPS for low costs; keep equity high when young (Active) or use Auto Life-Cycle and review yearly.
Integration Tips
- Use EPF/PPF for stability; complement with equity funds for growth.
- Consider NPS for additional tax breaks and disciplined equity exposure.
Education only; not investment advice. Assumptions are illustrative and can change with markets and regulation.