EPF Vs NPS: Understanding The Key Differences In India’s Retirement Plans

Last Updated: January 19, 2025, 09:05 IST

Both Employees’ Provident Fund (EPF) and the National Pension Scheme (NPS) are meant to provide individuals a month-to-month pension plan and a round figure repayment after they retire; nonetheless, there is an essential difference in between both.

In India, the Employees’ Provident Fund (EPF) and the National Pension Scheme (NPS) are both most prominent retired life pension. Both are meant to provide individuals a month-to-month pension plan and a round figure repayment after they retire. There is an essential difference in between both.

EPF is an ensured return strategy based upon rate of interest, whereas NPS is a market-linked financial investment program that enables financiers to select financial investment strategies and supervisors according to their hostile, modest and careful return approaches.

There is a chance that NPS will certainly outshine EPF over time due to the fact that it is market-linked. Some people might want to relocate their EPF funds to market-linked returns NPS if they favor them to taken care of returns (EPF).

Employees’ Provident Fund: Details About It

EPFO, or Employees’ Provident Fund Organisation, supervises of EPF. A substance rate of interest of 8.25 percent is supplied on a worker’s EPF payment yearly.

The highest possible amount a worker can add is 12 percent of their base salary and dearness allocation (DA). One of the advantages is that companies are needed to make equivalent payments to their staff members’ Employee Provident Funds.

EPF down payments made up to Rs 1.50 lakh within an are excluded from tax obligations. Additionally, withdrawals and rate of interest are tax-free.

National Pension Scheme: Know More About It

Any Indian nationwide in between 18 and 70 can open up an NPS account by mosting likely to an eNPS or Point of Presence-Service Provider (POP-SP) and supplying their checking account details and frying pan.

While NPS deals Tier II accounts without any lock-in term, Tier I accounts have a 60-year-old lock-in period. A minimal yearly repayment of Rs 1,000 and a payment of Rs 500 are needed to begin an NPS Tier I account.

You can begin a Tier II account by adding Rs 250. After that, no minimal equilibrium is required. Under Section 80 CCD (1 ), Tier I accounts offer tax obligation advantages as much as a total amount of Rs 1.50 lakh.

Only NPS clients are qualified for an additional reduction under subsection 80CCD (1B) for financial investments as much asRs 50,000 in NPS (Tier I accounts). The NPS payment made by a company for the advantage of their staff members as much as 10 percent of their base salary plus DA is subtracted from their gross income as much asRs 7.50 lakh. For Tier II account owners, there are no tax obligation benefits.

Is it feasible to move EPF to NPS?

Yes, EPF transfers to NPS are feasible for those having Tier I NPs accounts. To do that, the transfer demand type need to be sent out to the company. The transfer from the PF/superannuation fund is discussed by the company in the submitting note.

A cheque or DD is after that constructed to the personal staff member for the Point of Presence, Collection Account (NPS Trust) and Subscriber Name (PRAN). On the various other hand, an identified PF or superannuation fund will certainly send out a check or DD to federal government employees made payable to ‘Nodal Office Name – Employer Name – Permanent Retirement Account Number (PRAN)’.