Details of EPF and NPS schemes for young professionals. differences and similarities in both schemes. why NPS. why PPF. both explained

1. Employee Provident Fund Vs National Pension Scheme
Manish Dwivedi
dnamanish@gmail.com
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2. EPF NPS
Employee Provident Fund National Pension System
Compulsory to all employees Govt. or
private who have below 15000 salary pm
Also called “New Pension Scheme” for any citizen
Defined Benefit at the end of term /
maturity
No defined Benefit
Beneficiary will get a lump sum amount Beneficiary will get a lump sum amount plus life
time pension depending upon fund selection.
Employer contribution Compulsory Employer can also contribute

3. EPF NPS
Minimum maturity term 15 years Minimum maturity 60 years of age
Entry at any age Any one from 18 to 65 years of age
Early withdrawal allowed for some case after 3 years Early withdrawal allowed for some case after 10 years
After 15 years plan can extend for 5 years up to life Withdrawal can delay. Joined after 60 can invest up to
70 years

4. EPF NPS
Debt type instrument Debt + Equity
EPFO can invest some portion in Equity Person can select Fund manager and percentage of
Equity debt portion of investment
100 % debt (5 % Equity by EPFO) 25 to 75 % Equity
EPF NPS
After 15 years After Retirement or at 60 year of age
100% withdrawal Minimum 40% need to invest in Pension scheme as
Annuity
Amount is total invested + intrest (Total invested + interest ) 60% + pension till life

5. EPF NPS
Fix interest rate as per Govt. scheme As per fund manager + Equity rate
Current rate is 7.1% Expected 8 % in debt and 12 % in Equity (10 years)
Can change as per Govt. order Depends on market / economy
Income tax exemption up to 150000 Rs investment Employer contribution fully exempted additionly
80C 80CCD
EPF NPS
Get all the money at maturity Not get. Only 60% of total accumulated
Need to invest in New pension scheme to cover whole
lift
Get lifetime pension from 40% annuity amount
No future inflation maintenance future inflation maintenance can be cover by further
investment of withdrawal amount

6. EPF NPS
3000 pm , start at the age of 40 years
Total invested = 7,20,000/-
Total interest @7.1% = 8,29,435/-
Total maturity = 15,49,435/-
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Withdrawal @100% = 15,49,435/-
Pension from Annuity = 00
Annuity amount to nominees = 00
3000 pm , start at the age of 40 years
Total invested = 7,20,000/-
Total interest @10% = 14,53,585/-
Total maturity = 21,73,585/-
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Withdrawal @60% = 13,04,151/-
Pension from Annuity = 4,347/- pm (approx @6%)
Annuity amount to nominees= 8,69,434

7. 0
500000
1000000
1500000
2000000
2500000
Total invested Total interest Total maturity Withdrawal Pension from Annuity Annuity amount to
nominees
EPF 720000 829435 1549435 1549435 0 0
NPS 720000 1453585 2173585 1304151 4,347 869434
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