PPF vs GPF: Compared! What to choose? Check experts' view

PPF vs GPF: The Central Government employees have to mandatory contribute in their Provident Fund (PF) account and in the General Provident Fund (GPF) account. Both are considered as retirement-oriented schemes that aim to accumulate money that is enough to meet the financial requirements of the employee post-retirement. In PF, they are getting 8.5 per cent returns for April to June 2020 quarter while in GPF, they are getting 7.1 per cent returns for the same period. Now, if we look at the Public Provident Fund (PPF), it also gives 7.1 per cent returns. So, is it wise for a government employee to invest in both GPF and PPF?

Speaking on PPF vs GPF; SEBI registered tax and investment expert Jitendra Solanki said, "When an earning individual is a central government employee, he or she is getting mandatory monthly deduction of PF, GPF and Gratuity. In that case, these three would together make a good corpus of money that will help the central government employee to meet one's financial requirements post-retirement. But, opening a PPF account to meet other financial goals might not be a wise decision as he or she is already availing the GPF which gives the same 7.1 per cent assured return."

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Batting for the National Pension Scheme for the central or any other government employee ahead of the PPF; Solanki said, "In my opinion, the Government employee should open an NPS account keeping its debt and annuity ration in 50:50. By this way, in long term, they will be able to get 8 per cent returns on the debt account and near 12 per cent on the annuity account that will together make 10 (4 + 6) per cent at the time of their retirement."

Standing in sync with Solanki's views; another SEBI registered tax and investment expert Manikaran Singhal said when a government is already getting GPF, there is no meaning of investing in PPF. He also said that one should invest in other government-backed small saving schemes like NPS.

However, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Both GPF and PPF have their own value. PPF is designed for investing for the period of 15 years and anybody can invest in it. A government employee can invest in PPF keeping higher studies of one's child in mind as GPF withdrawal is little hectic compared to PPF withdrawal." Jhaveri also said that PPF is quite useful for those who are not a government employee and want an investment tool where there is guaranteed return."