Source |www.ndtv.com : By Priyabrata Prusty
Public Provident Fund (PPF) and Provident Fund (PF) take centre stage whenever savings for retirement come to mind for most of us. Although EPF or Employees’ Provident Fund is for salaried employees only, PPF is for all. People have been investing in PPF – which provides secured return over the long term – for ages. However, the National Pension Scheme or NPS has been gaining lot of attention as a retirement savings product after the government provided additional tax deduction of Rs. 50,000 in Budget 2015-16. NPS is a defined contribution based Pension Scheme launched by Government of India from January 1, 20014 with an aim to provide old age income with reasonable market based return over the long term. Under NPS, there are two types of accounts: Tier I and Tier II. While the Tier I account is non-withdrawable till the age of 60 except in specific situations, the Tier II account is a voluntary savings account. Subscribers to Tier II accounts can withdraw the money whenever they want.
Here are the key differences between NPS and PPF:
Who can invest?
A PPF account can be opened by any Indian resident. One can also open a PPF account in the name of his or her minor children and can avail tax benefit on the contribution. However, an NPS account can be opened by Indian citizens above 18 years and less than 60 years of age. Non-resident Indians (NRIs) can also open an NPS account, but they cannot open a PPF account.
A PPF account matures in 15 years. One can also extend this term after 15 years by a block of five years with or without making further contribution. However, in case of NPS, the maturity tenure is not fixed. You can contribute to the NPS account till the age of 60 years with an option to extend the investment to the age of 70 years.