Having a systematic savings plan for your retirement is very important. The government has started two major schemes to inculcate this habit in everyone - EPF and NPS. 

Let us start by taking a glance at their differences first. 

What is the Difference Between NPS and EPF?

If you are searching for ‘EPF vs NPS’, the major difference is that EPF is only for salaried individuals, whereas the other can be started by anyone. 

This table highlights some of the major differences between the two saving schemes - 

Employee Provident Fund (EPF) 

National Pension System (NPS)

This is a compulsory scheme for most employees 

This is a voluntary scheme for all Indian citizens, regardless of their employment status

The employee contributes 12% of their base salary to this fund

People can choose minimum Rs.500 or Rs.1,000 for Tier I and Tier II, respectively

The contributions need to be made every month

Minimum one contribution needs to be made every year

The employer contributes 3.67% of the employee’s salary every month

This does not involve the employer 

The employee must have completed 5 years of service to be able to withdraw prematurely (for the purpose of property purchase)

Up to 60% of the amount can be withdrawn but the remaining should be used to purchase an annuity 

Final settlement can be done after employee turns 55

60% of the amount can be withdrawn at the age of 60

Guaranteed tax-free returns 

The returns are linked to rises and dips in the market

What is NPS?

NPS stands for the National Pension System and it was made available to every citizen on the 1st May, 2009. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). 

Here are some more details about NPS - 

What is EPF?

EPF stands for Employee Provident Fund and this scheme was launched under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. 

It is controlled by the Ministry of Labour and Employment, and is a compulsory scheme for all employers who employ more than 20 people. In some cases, organizations employing less than 20 people also have to be part of the scheme, depending on terms and conditions. 

Here are some more details about the EPF - 

EPF vs NPS - Which is Better?

If you are searching for ‘NPS vs EPF’ to consider which would be a better retirement fund, consider these points - 


Both these schemes have different eligibility criteria. They are mentioned below - 

Tax Benefits

The way the tax is calculated varies greatly between an NPS and an EPF account. Here are the details - 

Rules Regarding Withdrawal

The rules are different when it comes to withdrawing money from these accounts. It is mentioned in detail below - 

You can take all these points into consideration to decide which is better - NPS vs EPF.


Saving money for your retirement is essential, but where and how much to invest is a big question. If you are searching for EPF vs NPS vs PPF (Public Provident Fund), all of them are long-term investment schemes initiated by the government to inculcate a habit of systematic savings.

The EPF account is for all salaried people and contributions are made by both the employee and the employer. Whereas the NPS and PPF account can be opened by all citizens. 

The EPF account has more rules regarding how much is to be set aside every month, even though voluntary contributions can be made. Both the NPS and the PPF are more flexible when it comes to how much is to be invested, and the terms can be tailor made for the investor. 

To summarize, all of the schemes have their pros and cons but are essential. You must start investing in one or more of them to secure your future. 

EPF vs NPS - Related FAQs

PPF is short for Public Provident Fund, and it is a voluntary savings cum investment scheme. It is a popular option given its safety, good returns, and tax benefits.

Yes, if you are a salaried individual, you can have both an EPF and PPF account.

The EPFs and the PPF are both backed by the government, and thus are safer investments. As for an NPS, the returns depend on the market, so it has comparatively higher risk.

As an NPS subscriber, you have an option to choose between two types of accounts - Tier-I and Tier-II. The first one is a mandatory retirement account, whereas the second is a voluntary option. You have more flexibility in terms of withdrawal from the Tier-II account as compared to the TIer-I account.

No, if you change your job or location, there is no need to reopen your EPF and NPS account. Your NPS is portable from one location to another and your EPF account has a Universal Account Number, which can be maintained every time you switch jobs.


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