These three government-backed retirement instruments form the backbone of financial planning for most Indian salaried employees. Here's a definitive comparison.
Mandatory for employees of companies with 20+ workers. Both employee and employer contribute 12% of basic salary. Current rate: 8.15% p.a. Tax treatment: EEE for employees. Employer contribution partially goes to EPS (pension scheme).
Best for: Passive retirement savings — happens automatically. Cannot directly choose this.
Voluntary government savings with 7.1% p.a. tax-free returns. 15-year lock-in (extendable). Maximum ₹1.5L/year. EEE tax status — contribution deductible, interest tax-free, maturity tax-free.
Best for: Risk-averse investors wanting guaranteed tax-free corpus. Section 80C optimization.
Market-linked returns (8-12% historically based on equity/debt mix). Additional ₹50,000 deduction under 80CCD(1B) beyond 80C limit. At 60: 60% lumpsum tax-free + 40% annuity (pension). Lowest expense ratio (0.03-0.09%).
Best for: Additional tax saving beyond 80C, market-linked growth with pension component.
| Priority | Best Choice | Why |
|---|---|---|
| Auto retirement savings | EPF | Mandatory, employer matches |
| Tax saving (80C) | PPF (up to ₹1.5L) | Tax-free maturity, safe |
| Extra tax saving beyond 80C | NPS | ₹50K extra deduction |
| Maximum wealth creation | Equity SIP | 12-15% returns (after all of above) |
The ideal strategy: EPF (automatic) + PPF (₹1.5L/year for 80C) + NPS (₹50K/year for extra deduction) + Equity SIP (remaining savings for maximum growth).
Use our free calculators to see exactly how your money grows.
Disclaimer: This article is for educational purposes only. Not investment advice. Contact: myself@sipcalculators.in