Retirement Schemes in India: NPS vs PPF vs EPF — What Each One Actually Gives You

Most of us meet retirement the way we meet a train we cannot catch. Every year we say we will start. Every March we look at the same two or three options and pick the one we understand least.

The problem is not laziness. It is that nobody explains the whole map.

Most articles you will read today compare two schemes and stop. This one puts the whole landscape on one page — what each scheme is, when you can touch the money, what the taxman does to it, and what the records actually show — and then points you to the deep dives on whichever question you came with. It is the parent page, not the last word on any one scheme.

Take five minutes. It will save you a decade of half-informed decisions.

## What a retirement scheme in India actually has to do

Three jobs. That is all.

**Turn a corpus into monthly income after you stop working.** A retirement corpus is not a retirement. It is fuel. If it sits untouched in a bank account it is not a plan, it is a delay.

**Survive 25 to 30 years on it.** That is longer than most careers. A scheme that leaves you exposed at 70 has failed, no matter how good it looked at 35.

**Not be eaten by tax and inflation.** Inflation runs at 4–6%, which over 25 years quietly consumes a large share of anything you saved. Tax takes a second cut at the end.

Every scheme below is judged on those three jobs, not on its tax-reputation or its popularity.

## The five schemes, one table

Two things in that table deserve a pause.

**EPF and VPF are not really choices.** VPF is just more of the same fund your EPF already runs in. Most salaried readers already hold EPF without having chosen it, which is why it belongs on this page even though we are not going to build the comparison around it.

**Note on EPF rows:** the vesting and pension-age rules differ by the date you joined, and the rules have changed for cohorts joining from 1 October 2024. We are not printing a single vesting year here, because a single year would be wrong for most of the readers reading this. For the EPF details that apply to you, use your EPFO passbook and the EPFO’s current notification.

## The two dates that decide everything

Almost every retirement argument collapses into two numbers: when does the money stop going in, and when can I start taking it out.

**The contribution lock.**

– PPF: 15 years from the end of the year you opened the account.
– NPS: no lock-in at all for the All Citizen Model. What you have is **vesting — 15 years or age 60, whichever comes first**. That is the point at which you qualify for a normal exit.

**The first access.**

– PPF: **year 6**, at a ceiling of 50% of the lower of your balance at the end of the fourth preceding year or at the end of the preceding year (PPF Scheme 2019, para 10(1)).
– NPS: at vesting, subject to the exit rules below.

Two misconceptions die here, and both are widespread.

*”You can withdraw from PPF only after 15 years.”* No. Fifteen years is **closure** (para 11(1)). Partial withdrawal opens at five years (para 10(1)). Both windows are real, and people confuse them constantly in both directions.

*”NPS locks you till 60.”* No. It vests at 15 years or 60, whichever is **earlier**. If you joined at 25, you are vested at 40.

## The rule change nobody explained

In December 2025 the pension regulator rewrote the NPS exit rules: the mandatory annuity at exit dropped from 40% to 20% for the **non-government sector** (All Citizen Model and corporate sector), so you can now take up to 80% of your corpus as lump sum; the lock-in was removed for the All Citizen Model; vesting became 15 years or 60, whichever is earlier; partial withdrawal moved to four times with a four-year interval, three years after 60; and a new withdrawal purpose was added for settling a financial obligation. **The government sector did not change — it stays at 60/40.** The corpus slabs, the Systematic Withdrawal option, the deferred withdrawal option and the age-by-age lifecycle all live on the leaf pages, not here: see [NPS withdrawal rules 2026](/nps-withdrawal-rules-2026/) for the lifecycle and [NPS new withdrawal rules: the 80% tax trap](/nps-new-withdrawal-rules-2026-80-percent-lumpsum-tax-trap/) for what the 80% permission costs you in tax.

## The 60/80 tax gap — the one number to remember

Here is the part most articles get wrong.

The regulator lets you take up to **80%** of your NPS corpus as lump sum **if you are in the non-government sector** (All Citizen Model or corporate sector). **If you are a central or state government employee, the cap for you is unchanged at 60% lump sum and 40% annuity, and none of the 60/80 gap below applies to you at all.** The tax law exempts only **60%** of the total amount payable at exit — s.10(12A) of the Income-tax Act, 1961 (repealed 1 April 2026), now **Schedule II, Sl. 6 of the Income-tax Act, 2025 (see s.11)**. Sixty per cent. Not eighty.

Non-government subscribers only — if the 60% cap is your rule, stop reading here. Do the arithmetic on a corpus of ₹66.3 lakh. 80% as lump sum is ₹53.04 lakh. The exempt ceiling is 60% of ₹66.3 lakh, which is ₹39.78 lakh. The taxable slice is **₹13.26 lakh**, taxed at your slab.

That is not an estimate. It is arithmetic on a statutory cap. The extra twenty points of permission the regulator gave you cost real money on the way out, and the annuity income you buy with the rest is taxable at your slab every year you receive it. [The tax-trap page](/nps-new-withdrawal-rules-2026-80-percent-lumpsum-tax-trap/) works this through with a full example.

### A note on the section numbers, since you will meet two of them

The Income-tax Act, 1961 stands repealed from **1 April 2026**. Every tax section named in this article — s.10(12A), s.80C, s.80CCD(1), s.80CCD(1B) and s.115BAC — is a **1961 Act** number, and readers will keep finding that number on forms and in older advice for some time. The 2025 Act is what governs a transaction today.

We print the 1961 number deliberately, because that is the number on your Form 10/16 and the number your accountant will recognise. Where the 2025 Act has replaced a provision outright, we name it too: the 60% NPS exemption is now **Schedule II, Sl. 6 of the Income-tax Act, 2025 (see s.11)**, and the pension scheme it refers to is s.124 of the 2025 Act.

If you are mid-exit, the old number is the one that matches your paperwork. If you are planning forward, the 2025 Act is the one in force. Both are on this page on purpose. The systematic renumbering is being worked through across the cluster as a separate pass — this page is not where that gets fixed.

## PPF, from the notified scheme

The PPF is governed by the **Public Provident Fund Scheme, 2019**, notified vide G.S.R. 915(E) dated 12 December 2019. Four rules a reader actually needs.

**The deposit ceiling.** Para 4(1): ₹500 minimum, **₹1,50,000 maximum** per year, in multiples of ₹50 — and that ceiling includes your minor’s account if you run one. Joint accounts are not permitted (para 3(3)).

**The rate.** **7.1% per annum, notified 30 September 2026, effective to 31 December 2026** (Department of Economic Affairs Office Memorandum No. 11412019-NS dated 30 September 2026; Department of Posts SB Order No. 12/2026 dated 30 September 2026). It has held at 7.1% since 1 April 2020, when it came down from 7.9%. The government sets it **quarterly**. It is not a rate fixed for 25 years.

**The interest basis, and this is the bit nobody tells you.** Para 7(1): interest becomes eligible each calendar month on the **lowest balance between the close of the fifth day and the end of the month**, and is credited at the end of each year (para 7(2)). So PPF does not pay the notified 7.1% on everything you deposit. Interest is earned on a monthly average balance, not on your full contribution for every day of the month. This is the most common PPF misconception and no comparison page owns it, which is why it is here.

**The loans and the two ceilings.** Para 8(1) allows a loan between year 1 and year 5, capped at 25% of the balance at the end of the second preceding year. Interest is 1% a year if you repay within 36 months and 6% if you do not (para 9(2)).

For the full scheme — extension blocks, para 12(4)’s separate 60%-per-block ceiling, premature closure on the three narrow grounds in para 13(1), nomination and death — read the complete PPF guide *(pending publish — insert OM-457’s live URL at publication; `/ppf-guide/` currently 404s)* and the [PPF calculator](/calculators/ppf-calculator/).

## What the records actually show

Returns, so readers can see the honest numbers rather than the marketing ones. Source: **PFRDA Annual Report 2024-25, Tables 3.27 and 3.30. All figures are historical Tier-I returns under Common Schemes, as on 31 March 2025, shown as a range across funds — not a projection, not a portfolio result.**

| Scheme (Tier-I) | Type | 1-year | 3-year | 5-year | 10-year |
|—|—|—|—|—|—|
| Scheme E | Equity | 2.11%–8.36% | 11.68%–15.10% | 22.27%–25.52% | **11.20%–12.51%** |
| Scheme A | Aggressive | — | 6.09%–7.65% | 6.55%–9.83% | **No 10-year history exists** |
| Scheme C | Returns since inception | — | — | — | 8.04%–8.65% |
| Scheme G | Returns since inception | — | — | — | 8.41%–11.73% |

Three things to take from that table honestly.

**The long-run equity number is 11.2% to 12.5% at ten years.** Not more. The eye-catching 22–25% is the **five-year** figure, and it is an artefact of the window those five years happened to cover. Quoting it as a long-run expectation is the single easiest way to publish a wrong number, and you will see it everywhere.

**Scheme A has no ten-year history at all.** No fund reports one. So “aggressive NPS has returned 13% over ten years” cannot be sourced, because it does not exist as a record.

**Returns since inception, 31 March 2025** (Table 3.26): Central Government 9.48%, State Government 9.44%, Atal Pension Yojana 9.23%, NPS Swavalamban 9.64%.

**PPF’s rate is knowable; NPS’s is not.** 7.1% is a notified rate with a notification date and an end date. An NPS return is whatever the funds delivered, and nobody can tell you what the next twenty-five years will look like.

### The corpus illustration, and what it assumes

Two different contributions, because PPF and NPS have different ceilings and pretending otherwise would describe an account you cannot open.

**Why the PPF row is ₹12,500 and not ₹15,000.** The para 4(1) ceiling is ₹1,50,000 a year. ₹15,000 a month is ₹1,80,000 a year — twenty per cent over the cap, and not a thing you can deposit. ₹12,500 a month is exactly ₹1,50,000 a year, which is as much as the law allows. That difference is the whole reason the PPF row starts lower, and it is worth knowing before you plan a contribution.

### What ₹15,000 a month would have produced — and why a real PPF gives you less

This is the part worth reading twice, because the two causes are not the same size. Start from a naive ₹15,000-a-month figure of **₹1.19 crore**, then apply the two things a real PPF account imposes:

**Almost all of the fall is not about the rate at all.** Effect 2 — the contribution ceiling — is nearly five times the size of Effect 1. If you read the whole 19.5% drop as “the para 7(1) rule is expensive”, you learn the wrong lesson, and you will go looking for a better interest rate instead of the correct conclusion, which is that **₹15,000 a month was never a legal PPF contribution in the first place.**

**What para 7(1) actually costs you: well under half a point against the notified 7.1%.** That is below the resolution any reader can act on, which is the right level of precision for it — it is not nothing, but it is not the reason the number moved. If you are comparing PPF’s return against some other scheme, this is the part to discount. **If you are comparing how much you can put in, this is the part that is irrelevant.**

Two smaller notes, so the figure can be checked. Deposit timing is nearly irrelevant — whichever day of the month you deposit on, the result moves by well under 1%, because the annual minimum is the balance you opened the year with. The figures also treat the notified 7.1% as a monthly rate compounded over the year, which is how a rate quoted “per annum” actually behaves when interest is credited once at year end. One more, because you will try it: the crores above are rounded for reading, and the percentages are derived from the exact figures underneath them, so dividing the rounded figures will not reproduce them exactly.

**These are illustrations, not returns.** The PPF row rests on a notified rate and a hard statutory cap, and your own passbook will show something slightly different. The two NPS rows are assumptions stated so you can see the shape of the compounding, not forecasts — a 25-year sequence that delivered 9.9% would contain years of minus ten per cent, and you would have lived through every one of them. No regulator publishes an NPS return in advance.

## Which one, honestly

**The regime question comes first, and it is not close.** Under the new regime — which is the default unless you have opted out — neither your PPF contribution nor your own NPS contribution buys you a deduction. What survives is your **employer’s** NPS contribution, up to 14% of salary where you opt for s.115BAC of the 1961 Act (see the note on section numbers above). If nobody told you which regime you are in, work that out before anything else in this article. It changes what every other number is worth to you.

Given that, the trade-offs are these.

**PPF’s strength is certainty, not safety.** You get a rate notified quarterly, a 15-year term, an exemption that does not vary with your slab, and no annuity purchase, no insurer, no drawdown tax. That is a genuinely rare combination. What you give up: the rate can be cut at any quarter, inflation eats most of a 7% nominal return over a quarter-century, and the whole balance is gone at 15 — there is no income stream, only a lump sum.

**NPS’s strength is corpus size and the annuity.** Market-linked funds have, over ten years, returned more than PPF’s notified rate — and they have also returned less, in some years by a lot. You also get the one thing PPF cannot give you: a pension that pays you monthly for life.

**EPF is the one you already have.** It is not usually a choice you make; it is a salary-line item. It sits inside s.80C, and it is the reason the ₹1.5 lakh aggregate cap is a real constraint for many salaried people.

The honest summary: **PPF wins on post-tax certainty. NPS can win on corpus size, and it is the only one of these that produces income in retirement. There is no universal winner, and anyone who tells you otherwise is selling something.**

For the head-to-head, with the full decision matrix and the post-tax exit arithmetic worked through: **[NPS vs PPF in 2026](/nps-vs-ppf-2026/)**. We are deliberately not rebuilding that matrix here — duplicating it is how two pages end up competing with each other instead of supporting each other.

## Route by question

This page is the map. Every deep dive in the cluster hangs off it, and each one is linked here once, in body text, with a plain-English description of what it answers — not a list of links at the end.

– **I want to know what I will actually get in my hand at exit** → [the 80% tax-trap page](/nps-new-withdrawal-rules-2026-80-percent-lumpsum-tax-trap/) — corpus slabs, the 60-vs-80 worked example, the annuity options.
– **I want to know when I can touch the money and what happens at each age** → [NPS withdrawal rules 2026](/nps-withdrawal-rules-2026/) — age bands, premature exit, death, post-60 joiners, Tier-II.
– **I am deciding between the two schemes** → [NPS vs PPF in 2026](/nps-vs-ppf-2026/).
– **I want the PPF rules in full** → the complete PPF guide *(pending publish — insert OM-457’s live URL)*. The four rules above are the ones readers actually hit; extension blocks, para 12(4), premature closure under para 13(1) and nomination are all there.
– **I am a salaried person and want to squeeze the most out of 80C, 80CCC and 80CCD** → [the salary optimisation cheat sheet](/epf-vs-ppf-vs-vpf-vs-nps-2026-salary-optimization-cheat-sheet/). That page works the ₹1.5 lakh aggregate cap as a budget problem; this page only states what the cap is.
– **I want to know what my EPF and VPF actually give me** → the five-scheme table above, then your EPFO passbook. There is no EPF leaf in this cluster, so this page plus the cheat sheet is where that question lands. Flagged as a genuine content gap rather than papered over with a link.
– **I want to check a number before I trust it** → the returns table gives the source and the exact period for every figure, the corpus illustration states what each row assumes, and the rate carries its notification date. Nothing here is a projection.
– **I am 55 and behind** → start here, honestly. The two dates above are the ones to check today, and your EPF is doing more work than you probably realise. A **SEBI-registered investment adviser** can look at your actual salary, tenure and existing balances — this page cannot.

## Risks, and what can go wrong

– **The government can change any of these rules.** Every figure here assumes the current rules hold for 25 years. Nobody can promise you that.
– **PPF rate risk.** The 7.1% notified 30 September 2026 (effective to 31 December 2026) is set quarterly by the Ministry of Finance. Do not build a plan around it being unchanged. A standing check at each quarter’s notification is worth ten minutes.
– **Inflation.** At 4–6%, inflation is the thing that actually erodes a PPF balance over twenty-five years — more than any rule in the scheme. Build your plan against that, not against the notified rate on its own.
– **Market risk on NPS.** Years of negative returns are normal, not exceptional. Any illustration above that assumes a percentage is an illustration.
– **The taxable slice.** If you are in the **non-government sector**, taking 80% as lump sum puts roughly a fifth of your corpus into your taxable income in the year you exit, and annuity income is taxable at your slab every year thereafter. Government-sector subscribers are capped at 60% lump sum, which is the same as the exemption — so this risk does not reach you.
– **Annuity quotes vary by provider, age and option.** No regulator publishes a reference rate. Get actual quotes, and get more than one — PFRDA’s own guidance is to compare across Annuity Service Providers before deciding.
– **The two-Acts problem.** The 1961 Act is repealed; the 2025 Act is in force; older forms and advice still quote the old numbers. That is why both citations appear above.
– **EPF vesting varies by cohort.** There is no single vesting year that is correct for everyone reading this. Use your EPFO passbook.

## One action to take today

Open your last two salary slips and your EPF passbook, and write down three numbers: which tax regime your employer deducts under, how much you have in EPF and VPF, and how much room is left under the ₹1.5 lakh aggregate s.80C + s.80CCC + s.80CCD(1) cap. Five minutes, and it converts every number on this page into a number that means something for you.

—

**Sources**

* **PFRDA press release**, *Key amendments in PFRDA (Exits and Withdrawals under the NPS) Regulations, 2015*, 19 December 2025 — comparative table of earlier versus revised stipulations, including the non-government versus government-sector carve-out.
* **PFRDA (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025** — dated 12 December 2025; Gazette of India, Extraordinary, Part III Section 4, No. 808, CG-DL-E-16122025-268548, published 15 December 2025; F. No. PFRDA/16/14/06/0009/2018-REGI-EXIT; Schedule I, Tables 1–3.
* **Public Provident Fund Scheme, 2019**, notified vide G.S.R. 915(E) dated 12 December 2019. Paragraphs 3(3), 4(1), 7(1), 7(2), 8(1), 9(2), 10(1), 11(1), 12(1)–(4), 13(1), 14(1), 15.
* **Department of Economic Affairs, Ministry of Finance**, Office Memorandum No. 11412019-NS dated 30 September 2026; **Department of Posts, Financial Services Division**, SB Order No. 12/2026 dated 30 September 2026 — PPF 7.1% for Q3 of FY 2026-27.
* **National Savings Institute** rate history — 7.9% to 31 March 2020; 7.1% from 1 April 2020 to 30 September 2026.
* **Income-tax Act, 2025, Schedule II, Sl. 6 (see s.11)** — “Income not to be included in total income”: payments from the National Pension System Trust, on closure or opting out of the scheme referred to in **s.124**, to the extent the payment does not exceed **60% of the total amount payable**.
* **Income Tax Department, Government of India** — *Objective and scope of the New Act FAQs*: repeal of the 1961 Act with effect from 1 April 2026.
* **Income Tax Department** — Deductions: s.80CCD(1), s.80CCD(1B), s.80CCD(2), s.80C, and the ₹1,50,000 aggregate cap.
* **Income Tax Department** — *New Tax Regime vs Old Tax Regime FAQs*: the new regime as default, annual opting out, permitted deductions.
* **PFRDA Annual Report 2024-25**, Tables 3.26, 3.27 and 3.30 — Tier-I returns under Common Schemes as on 31 March 2025.
* **PFRDA** — *Annuity Service Providers (ASPs)*: annuity rates and pension amounts vary across providers; subscribers are advised to compare rates and terms before deciding.

*This article is for education only. It is not investment advice and it does not recommend any product. Figures presented as corpus illustrations are arithmetic at assumed rates, not forecasts — market-linked returns will vary, and in some years will be negative. Consult a SEBI-registered investment adviser before investing, and a tax adviser for your own position.*

—

Retirement Schemes in India: NPS vs PPF vs EPF — What Each One Actually Gives You

About The Author

Om Patel

Leave a Comment Cancel Reply

About The Author

Om Patel

Related Posts

Leave a Comment Cancel Reply