Difference between NPS and PPF, Which is Better?

NPS vs PPF

Difference between NPS and PPF

Returns
 
PPF investments have fixed returns. Every quarter, the exact rate of return is set. The table given below shows PPF return rates for the current quarter and for the past two years:

Period

Rates

April-June 2021

7.1%

January-March 2020

7.1%

October – December 2020

7.1%

July – September 2020

7.1%

April – June 2020

7.1%

January – March 2020

7.9%

October – December 2019

7.9%

July – September 2019

7.9%

April-June, 2019

8.0%

January-March, 2019

8.0%

On the other hand, NPS returns vary depending on a fund’s performance. Here is a table showing the performance of some NPS equity funds.

Pension Funds

3-year Returns

5-year Returns

ICICI Pru. Pension Fund Mgmt Co. Ltd.

14.70%

50.10%

UTI Retirement Benefit Fund

2.40%

6.63%

LIC Pension Fund Ltd.

8.20%

41.50%

Kotak Mahindra Pension Fund Ltd.

25.40%

57.30%

SBI Pension Funds Pvt. Ltd.

14.80%

51.80%

Therefore, investors looking for details on NPS vs PPF returns can refer to the above tables.

Is NPS Better than PPF?

Comparing NPS and PPF: Interest Rates and Returns

Here is a table summing up the above points regarding NPS vs PPF. In addition to the NPS and PPF interest rates, you will find various other factors in the following table.

Features

PPF

NPS

Interest rates

7.1% in Q2 FY 2020-21

12%-14%

Returns

Decided by the government

Market-linked rates

Partial withdrawal

Allowed from 7th year onwards. One can also secure a loan during the 3rd and 6th financial year of account opening.

Individuals can opt for early and partial withdrawals after ten years. In case a subscriber plans to exit before retirement, he needs to buy an annuity with 80% of the accumulated corpus.

Investment style

Fixed as per the government regulations.

One can choose between equity funds, government securities funds and fixed income instruments while investing in NPS.

Annuity

No requirement for buying annuities.

One needs to buy an annuity with 40% of the NPS balance after retirement if the balance is more than ₹2 lakhs.

Can You Invest in Both PPF and NPS?

Frequently Asked Questions