SSY vs NPS: Which option can give you more on Rs 1.50 lakh yearly investment for 15 years; get calculations here

Post Office runs Sukanya Samriddhi scheme for the girl child. The scheme is aimed at helping parents build a corpus for their girl child's education and marriage. The scheme offers an 8.2 per cent interest rate calculated and compounded yearly. One can make a minimum of Rs 250 and a maximum of Rs 1,50,000 investment in a financial year in the scheme. Investments can be made in lump sums any number of times in a month or a year. 

The account can be opened by the guardian in the name of a girl child below the age of 10 years. Deposits in SSY can be made for a maximum up to the completion of 15 years from the date of opening. The scheme provides substantial tax benefits as deposits up to Rs 1.50 lakh in a financial year qualify for deduction under Section 80C of the Income Tax Act, 1961. Other than that, interest earned is also tax-free.

The SSY account can be closed after 21 years from the date of account opening or at the time of marriage of a girl child after attaining the age of 18 years, whichever is earlier.

NPS is a market-linked retirement scheme, where one can contribute monthly from the age of 18 years till 70 years. One gets a lump sum amount at the retirement age of 60 and a monthly pension after that.

Finance Nirmala Sitharaman made an important announcement related to NPS during her Budget 2024 speech last week. She launched NPS Vatsalya, a scheme where parents/guardians can contribute on behalf of a minor. 

Sitharaman said that the NPS Vatsalya account will be converted into a normal NPS account. It is yet to be known what will be the starting age to contribute to NPS Vatsalya.

To make calculation easy, we are dividing Rs 1.50 lakh by the number of months in a year. It means the monthly contribution in NPS and SSY will be Rs 12,500 a month. Since one can contribute to SSY for a maximum of 15 years, we are taking the same duration as the investment horizon for SSY and NPS. 

If you invest Rs 1.50 lakh for 15 years in the SSY scheme, your contribution in those 15 years will be Rs 22,50,000; the maturity amount will be Rs 43,20,516.00. But there is a catch here: in SSY, you contribute for 15 years but get interest for 21 years. For six years, when your contribution is zero, you get nearly Rs 27 lakh compound interest. It means the maturity value at the time of closing the SSY account will be Rs 69,27,578. 

If you invest Rs 12,500 a month in NPS for 15 years and get a 10 per cent growth on your investments, the interest earned is Rs 29,74,054, and the total corpus will be Rs 52,24,054.