NPS vs PPF: Which can give you higher returns on Rs 12,500 monthly investment for 15 years? Get examples
NPS vs PPF Calculator: National Pension System (NPS) is a market-linked retirement scheme where a NPS subscriber can choose equity exposure up to 75 per cent based on their age and risk appetite. This is a small savings scheme run by the post office and banks. Used as a small savings retirement scheme, PPF provides 7.1 per cent interest compounded yearly. The scheme has 15 years of lock-in period, but one can get an unlimited number of 5-year extensions at maturity.
NPS vs PPF Returns: National Pension System (NPS) is a market-linked retirement scheme where a NPS subscriber can choose equity exposure up to 75 per cent based on their age and risk appetite. Employees of the public and private sectors and self-employed people can contribute in phases or monthly in NPS. The starting age for NPS contribution is 18 years. NPS subscribers can contribute to NPS till the age of 75 years. At the age of 60 years, NPS subscribers with Tier I accounts have the option to withdraw their lump sum amount up to 60 per cent. The rest of the 40 per cent amount is used to purchase annuity. The annuity amount is invested to get a monthly pension.
(Disclaimer: These calculations are for knowledge purpose only. Actual calculations may vary.)
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NPS Investment Tax benefits
Taxpayers in the old tax regime can get deduction up to 10 per cent of their salary (Basic + DA) under Section 80 CCD(1) within the ceiling of Rs 1.50 lakh under Section 80 CCE of the Income Tax Act.
They can also get a tax deduction up to Rs 50,000 under Section 80 CCD(1B) over and above the Rs 1.50 lakh ceiling under Section 80 CCE.
Other than that, taxpayers are also eligible for tax deduction up to 10 per cent of salary (Basic+DA) (14 per cent if such contribution is made by Central Government) contributed by employer under Section 80 CCD(2) over the limit of Rs 1.50 lakh.
NPS deferment/withdrawal
At 60 years of age, NPS subscribers can defer annuity withdrawal up to 3 years and lump sum withdrawal up to 10 years, where they don't need to make any contribution to their NPS account.
NPS deferment/withdrawal
In another scenario, they can keep contributing to their NPS account till 75. Even if they extend their account, they have the right to stop it at any point and withdraw money.
The expected return in NPS based on equity exposure.
Public Provident Fund (PPF)
This is a small savings scheme run by the post office and banks. Used as a small savings retirement scheme, PPF provides 7.1 per cent interest compounded yearly. The scheme has 15 years of lock-in period, but one can get an unlimited number of 5-year extensions at maturity.
Public Provident Fund (PPF)
Deposits of up to Rs 1.50 lakh in a financial year provide tax benefits in PPF. Interest earned and the maturity amount are also tax-free. In the long run, PPF can be a strong debt option in a diversified portfolio. Its tax-free maturity amount can also help one get a substantial amount if they utilise the full investment limit of Rs 1.50 lakh in a financial year.
NPS vs EPF: What Rs 12,500 monthly investment can give you in 15 years
Here, we will show you 3 calculations based on your equity exposure.
NPS: Rs 12,500/m contribution in high equity-exposure fund
If you invest Rs 12,500 a month in an aggressive life cycle fund, where the equity exposure is 75 per cent, and get a 12 per cent return, your investment will be Rs 22,50,000 and the estimated corpus will be Rs 63,07,200.
NPS: Rs 12,500/m contribution in balanced equity exposure fund
If you invest Rs 12,500 a month in a balanced life cycle fund, where your equity exposure is 50 per cent, and you get a 10 per cent return, your estimated corpus will be Rs 52,24,054.
NPS: Rs 12,500/m contribution in conservative equity exposure fund
If you invest Rs 12,500 a month in a conservative life cycle fund, where the equity exposure is 25 per cent, and get an 8 per cent return, your estimated corpus will be Rs 43,54,315.
PPF: What Rs 12,500/m contribution in PPF can give
If you get a 7.1 per cent annual return on your Rs 12,500 monthly contribution in PPF, the estimated corpus after 15 years will be Rs 18,209.