NPS vs EPF vs PPF: What will your corpus be like on investment of Rs 12,500/month for 15 years
NPS vs EPF vs PPF: NPS is a retirement scheme where one can invest from the age of 18 till 75. One can make a lump sum or monthly instalments in a financial year in NPS. In EPF, the employee and the employer contribute a monthly amount to the EPF account of the employee. PPF is run by post offices as well as banks. All 3 schemes provide Section 80C tax benefits to the taxpayers following the old tax regime.
NPS vs EPF vs PPF: National Pension System (NPS), Employee's Provident Fund (EPF), and Public Provident Fund (PPF) are schemes that investors use for their retirement planning. NPS is market-linked, while EPF and PPF provide fixed interest rates. In NPS and EPF, investors get the lump sum amount at retirement and the monthly pension after that. In this write-up, know the basic difference between the three schemes and what Rs 12,500 per month investment in each of them may bring you in 15 years of period.
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NPS
NPS is a retirement scheme where one can invest from the age of 18 till 75. One can make a lump sum or monthly instalments in a financial year in NPS. They can also opt for equity exposure of up to 75 per cent for their NPS portfolio. At the retirement age of 60 years, they can withdraw up to 60 per cent of their retirement corpus and purchase annuity for the monthly pension from the rest of 40 per cent. If they want, they can defer lump sum withdrawal for 10 years and annuity for 3 years. In another condition, they can continue their investments up to 75 years of age.
EPF
In EPF, the employee and the employer contribute a monthly amount to the EPF account of the employee. The minimum monthly contribution is Rs 1,800, and the maximum is up to 12 per cent of the basic salary and dearness allowance of the employee. The employer's contribution also goes to the employee's Employee Pension Scheme (EPS), which the employee gets back in the form of a monthly pension post retirement. The current EPF interest rate is 8.25 per cent compounded yearly. Investments up to Rs 1.50 lakh in a financial year, interest earned, and the maturity amount are tax free.
PPF
It is a scheme run by post offices as well as banks. The scheme provides a 7.1 per cent interest rate compounded yearly. The scheme that has a lock-in period of 15 years has Rs 500 as the minimum and Rs 1.50 lakh as the maximum investment in a financial year. One can make a lump sum investment or monthly instalments in PPF. Deposits up to Rs 1.50 lakh in a financial year, interest earned, and the maturity amount are tax free. A distinguishing feature of the scheme is that it provides the option to extend the account for unlimited blocks of 5 years. So, one keeps getting compounding as their investment gets older.
PPF Calculation
|
Financial Year
|
Amount Deposited (₹) | Interest Earned (₹) | Year End Balanced (₹) |
| 1 | 120000 | 4615 | 124615 |
| 2 | 120000 | 13462.67 | 258078 |
| 3 | 120000 | 22938.51 | 401016 |
| 4 | 120000 | 33087.15 | 554103 |
| 5 | 120000 | 43956.34 | 718060 |
| 6 | 120000 | 55597.24 | 893657 |
| 7 | 120000 | 68064.64 | 1081722 |
| 8 | 120000 | 81417.23 | 1283139 |
| 9 | 120000 | 95717.85 | 1498857 |
| 10 | 120000 | 111033.82 | 1729890 |
| 11 | 120000 | 127437.22 | 1977328 |
| 12 | 120000 | 145005.26 | 2242333 |
| 13 | 120000 | 163820.64 | 2526154 |
| 14 | 120000 | 183971.9 | 2830125 |
| 15 | 120000 | 205553.91 | 3155679
|
NPS vs EPF vs PPF: Which may give highest corpus on Rs 10,000 monthly investment for 15 years?
If you invest Rs 12,500 monthly in NPS, EPF, and PPF, you can withdraw amount only in PPF. After 15 years of service, NPS and EPF allows wihdrawals under specific conditions.
PPF calculator
In PPF, if you invest Rs 12,500 a month for 15 years, or Rs 22.50 lakh investment in total, at the rate of 7.1 per cent interest rate, the total interest will be Rs 18,18,209, and the estimated maturity amount will be Rs 40,68,209.
EPF calculator
In EPF, at the rate of 8.25 per cent, a Rs 12,500 monthly investment for 15 years will give you an estimated amount of Rs 44,95,556.87.
NPS calculator
If you get a 10 per cent return on your NPS investments, the estimated maturity amount on a Rs 12,500 monthly investment will be Rs 52.24 lakh.
NPS calculator
If you get a 12 per cent return on your investments, the estimated maturity amount on a Rs 12,500 monthly investment will be Rs 63.07 lakh.