EPF vs. NPS which could be the better retirement saving option
Nowadays people have lots of options for the investments to secure their future by investing their saving into better option. Here are the meaning of options are plans which provide us the service to invest our savings into that particular So that after the date of maturity or after the date of retirement the investors no need to worry about their expenses or any other fund relevant things. As we know that now we don’t need to suffer to opt any investment plan in all over India because nowadays everything are easily available on the medium of online that’s why people can easily opt any investment option just by trusting on the particular website and completing the easy documentation. But there are the problem which is faced by many investors is that, they are very confuse to opt any plan because they are not familiar the benefits and they also have greediness about the high paying return so as there are lots of plans but in this article we are going to know about the difference between two saving options and after knowing the difference you can easily find the right option and those plans are EPF(employee’s provident fund) and NPS(national pension scheme). First of all let’s know about, what is NPS and EPF.
What is EPF?
Employee’s provident fund requires their employee to contribute at least 12% from their salary and their employer also contribute the same amount into the employee’s EPF and after the age of retirement the employee can get the amount and the age should be 58. And then employee can withdraw the entire amount.
What is NPS?
This scheme has launched by the government since 2004 but after 2009 private sector’s employees are also eligible for this scheme. A employee must have a NPS account which is divide into two parts (teir-1 and trie-2) the employee have to deposit at least 500 under teir-1 and 1000 under teir-2 and after that there are no fixed limit for deposit the amount into the account.
The basic difference between both above mentioned investment plans
Minimum investment:- In the case of EPF the minimum investment should be 12% of the per month salary and in the case of NPS the employee must have 6000 per annum in the tier-1 account.
Investment return:- EPF provides 10-14% investment return per annum according to the market risk and NPS provides around 8 to 8.7% investment return.
Nature of contribution: – EPF is a mandatory to opt for those who earns 15000 per month or less than this and voluntary for others but the NPS is voluntary contribution whoever are interested in this investment plan they can easily opt this.
Sum of maturity:- EPF provides the 100% of maturity amount but the only condition is the employee must have to attain 58 age but the NPS never provides the 100% at their maturity time because it is divided between two sessions that is 60% of the matured amount they provides after the 60 years and 40% of the matured amount should be use by the receiver to purchase the annuity.
Tax exemption:- EPF and the interest accrued amount are totally exempt but the amount of NPS are partially exempt in which the 60% of maturity amount are tax free mean the investor no need to pay tax on that by the rest 40% are not exempt , the tax are mandatory on that.
Risk:- EPF are the government assured investment plan that’s why it is risk free plan but as we know that NPS are related to the market and the investor get interest as the market’s condition or have to bear little bit of loss as well so we can say that NPS are risk involved plan.