Outlook Money
Public Provident Fund (PPF) and the National Pension System (NPS) are government-backed long-term, low-risk retirement savings plans.
NPS and PPF contributions up to Rs 1.5 lakh in a financial year are deductible under Section 80C of the Income-tax Act.
PPF has a 15-year maturity period, while NPS' lock-in is up to the retirement age 60.
NPS subscribers can withdraw up to 60% of the fund in a lump sum at maturity; PPF allows partial withdrawals and full exit on maturity.
NPS subscribers must use 40% of the corpus to buy a pension plan at maturity, but PPF subscribers can make partial withdrawals of up to 50% of their credit balance after five years.
PPF offers a 7.10 per cent interest rate per annum, while NPS provides 8 per cent.
Both are government-supported investment instruments, providing safety to your retirement funds.
NPS subscribers select a pension fund manager and investment strategy to invest in the scheme; PPF subscribers use their preferred bank account to maintain their retirement fund.