Which scheme is better for retirement planning, which one to choose between NPS or PPF

Business desk. Retirement planning is very important for any person. To avoid having a heavy financial burden when your employment comes to an end, you should start retirement planning early with wise investments. Today we are going to tell you about two such schemes, which can help you in retirement planning.

Both National Pension System (NPS) and Public Provident Fund (PPF) are good options for retirement planning. In such a situation, people are confused about which of the two plans is better.

What is NPS and PPF
NPS is a market-linked scheme. There is no fixed return and it depends on the performance of the fund manager. Whereas, in PPF, the investor gets fixed returns. That is, a fixed interest is given by the government every year on your invested amount.

Option in NPS and PPF
Investors have a wide range of investment alternatives in NPS because of the market-linked programme. In the first option, 75 percent of investment is made in equities before the age of 50 years. In the second option, 100% investment is made in corporate bonds. In the third option, investment is made in government securities. There is no such option in PPF. Talking about the last few years, PPF has given an average annual return of 7 to 8 percent.

Maturity in NPS and PPF
The maturity of NPS is after attaining the age of 60 years. On maturity, you can withdraw 60 percent of your deposit and the remaining 40 percent is invested in an annuity to pay your pension. In this, you can withdraw 25 percent of the money before maturity. However, there are some conditions for this. Whereas PPF matures in 15 years. From the seventh year after the account’s inception, you can make certain withdrawals.

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Tax Benefits in NPS and PPF
Investments in both NPS and PPF are eligible for an exemption of up to Rs 1.5 lakh in a financial year under section 80C of Income Tax.

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