NPS vs EPF www.onerupee.et

1. 5 Reasons why NPS is better than EPF for retirement
The National Pension Scheme was launched by Pension Fund Regularity and Development
Authority (PFRDA) on 1st January 2004 .The main objective of this scheme was to provide
retirement income to all the citizens of India.
Every NPS subscriber is allotted a unique Permanent Retirement Account Number (PRAN). You
can access this unique PRAN from any location across India and its remains same for the rest of
the subscriber’s life.
PRAN provides its subscribers access to two personal accounts:
1. Tier 1 Account: This account does not allow premature withdrawal.
2. Tier 2 Account: This account allows the premature withdrawal before retirement.
Whereas
Employee Provident Fund (EPF) came into existence on 15th March 1951 with the purpose of
providing financial stability and security to senior citizens of India. In EPF individual contributes
on an regular basis once he starts working. EPF main objective is to save a part of individual
salary on monthly basis and pooled together all the money into a trust.
1. Eligibility: EPF is only applicable for salaried employees whereas in NPS any individual
can invest and can staring investing from the age of 18 years up to the age of 60 years.
2. Lock-In Period: NPS scheme has a lock-in period of 60 years whereas EPF there is no
lock-in period.
3. Contribution: In EPF an employee has to contribute at least 12% of his basic pay and
equal amount is contributed by the employer. Therefore at least 24% of your basic salary
is invested in EPF But in NPS the minimum investment should be INR 6000 in a year
and there is no limit maximum contribution. And minimum one contribution should be
made in a financial year.
4. Investment: EPF scheme invest in government securities or bonds issued by
government-owned companies whereas NPS is allowed to invest only up to 50% of its
corpus in equity. Investing long term money in equities can earn better returns for
investors. NPS core advantage that it customizes the investor’s portfolio as per his age.
5. Tax Benefit: NPS scheme provides citizens tax deductions under the section 80C,
80CCF and the newly introduced section 80CCD (2) and it is the duty of the employer to

2. invest in the section 80CCD (2) which benefits employees in additional tax savings. Up
to 10% of an employee’s salary can be invested in NPS which is tax deductible. EPF
investments also qualify for deduction under section 80C.
The main advantage for NPS subscribers is the portability & transparency in the system. The
PRAN No which is allotted to you remains the same and valid throughout your life. Once you
login you can see each and every credential online.