NPS vs PPF, which is the best saving Scheme? Scroll down this page and you can gain complete knowledge about the National Pension scheme (NPS) and the Public provident Fund (PPF). Both are the saving schemes with slight variations in their investment and interest rates. All the differences between the NPS and PPF are given in the below sections of this page. Therefore, it will be so easy for you to select the best investment scheme.
NPS vs PPF
Everyone will be confused if you have to choose the best of two. In the same way, it is also difficult for you to select the best scheme to invest. So, read this article completely to get a clear idea about What is NPS? and What is PPF? Definitely, you can understand the major differences between the NPS and PPF with the help of our comparison. The eligibility, age limit, interest rates, lock in period, tax benefits of both the schemes are tabulated below.
What is Public Provident Fund?
The Public Provident Fund is a saving scheme regulated by the government of India. The major advantage of the PPF is, it is a tax-free saving scheme. There are very low-interest rates which are announced by the central government of India every year. The Public Provident Fund is a long-term saving scheme with a lock-in period of 15 years. You can get Income Tax deductions on PPF for the investments up to Rs. 1.5 lakh per year. It has a premature withdrawal facility, it means in the case of financial emergency you can withdraw the money. Renewal/ extension of the PPF scheme is possible.
The PPF interest rate is 8.1% as per the government of India. It is decided by the ministry of Finance every year. PPF account can be opened at any nationalized bank or post office using the PPF Form A. PPF saving scheme has a low risk and secured as it is regulated by government bonds. There is no possibility to have a joint account in the Public provident fund scheme. The investment minimum limit for a year is Rs. 500 and the PPF account may be opened with Rs. 100. PPF Deposits can be made through net banking, credit card, debit card. The PPF advantages are as follows.
- Risk level is very low.
- Minors can also open PPF account.
- PPF Renewal/ extension period is for 5 years.
- No particular eligibility rules.
- PFF interest rate is exclusive.
- Financial liquidity.
- Loan facility.
- Exemption from Income Tax i.e., EEE status as per the Income Tax section 80C.
- PPF Account opening process is simple.
- A joint account is not possible for PPF.
- HUF’s and Trust are not eligible to open PPF account.
- NRI’s also can’t open PPF account.
What is National Pension Scheme (NPS)?
NPS is a long term saving scheme, which will be beneficial for the persons who are between 18-60 Years. It was launched by the government of India on 1st Jan 2004. National Pension scheme has a plenty of investment options for the employees. This scheme helps the citizens to earn the income after their retirement. PRAN is the Permanent Retirement Account Number which is assigned to each person at the time of joining the NPS scheme. Generally, there will be only 1 account number, but this NPS has 2 account numbers which can be accessed at any time. The NPS accounts categorized as Tier I and Tier II accounts.
NPS Tier I Account: It is only for the purpose of saving but not for withdrawals.
NPS Tier I Account: This account is meant for the both withdrawals and savings.
The national pension scheme can be subscribed by both the central and state government employees. The money you invest in the NPS will be managed by one of the 8 pension fund managers. There are no fixed returns for the National pension scheme. To keep the NPS account safe, you have to invest a minimum amount of Rs. 6,000. Maximum Tax deductible from Income is 2 lakhs per annum. The NPS account locked till the retirement period i.e, 60 years. The following are the National Pension Scheme NPS benefits.
- Huge Investment offers.
- NPS is a retirement friendly.
- Facility to choose the Fund Managers.
- Tax-free benefits.
- Great Investment scheme for all employees offering portable investments.
- Partial withdrawals.
- Investments at low cost.
- Dual Accounts.
- Cheapest pension plan.
- No guarantee.
- High lock in period.
- Lack of liquidity.
NPS vs PPF – National Pension Scheme & Public Provident Fund
|Objective||Long term planning||Long term but 15 years tenure|
|Eligibility||18-60 years||All citizens|
|Interest Rates||Not Fiixed||8.10%|
|Minimum Investment Amount||Rs. 6,000 per year||Rs. 500 per year|
|Maximum Investment Amount||No limit||Rs. 1.5 lakh per year|
|Maximum Tax Deduction & Tax Benifit||Rs. 2 lakhs per year||Rs. 1 lakh per year|
|Lock in period||60 years||15 years|
|Maturity amount||60% of NAV, 40% offered by LIC||Entire investment is given back|
|Investment Modes||3 sectors||No Investment Options|
|Loan Options||No loan option||You can withdraw 50% at the end of 4 th year|
Now, after observing NPS vs PPF comparison, decide the best saving scheme. On deciding, check the possible ways to open PPF or NPS accounts. The following are the list of banks to open PPF account.
PPF Account Opening Banks List
- SBI PPF Account.
- ICICI PPF Account.
- Vijaya Bank PPF Account.
- Bank of Baroda PPF Account.
- PNB PPF Account.
- Indian Overseas Bank PPF Account.
- Andhra Bank PPF Account.
- UCO Bank PPF Account opening.
- Axis BankPPF Account.
- Canara Bank PPF Account.
List of Banks to Open NPS Account
Only some banks have a facility to open the National Savings Scheme Account. Some of the best banks to open NPS account are below.
- ICICI NPS Account.
- HDFC NPS Account.
- Axis Bank NPS Account.
- Kotak Mahindra NPS Account.
- Bank of Baroda NPS Account.
- SBI NPS Account.
- Reliance Capital Limited.
- General Insurance Bajaj Allianz Co Ltd.
- IDBI NPS Account.
We know that there will be a Pension fund manager, who will regulate the National Pension Scheme. So, there is a need to know the Pension Fund Managers list. Therefore, we have given the list of Pension fund managers below.
- Asset Management Kotak Mahindra Company Limited.
- Asset Management Reliance Capital Company Limited.
- Pension Funds SBI Limited.
- Retirement Solutions UTI Limited.
- I Life Insurance CICI Prudential Company Limited.
- Asset Management IDFC Asset Management Company Limited.
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