← All guides

Retirement guide

NPS vs PPF: which retirement plan wins?

Both are long-term, tax-friendly ways to build a retirement corpus. PPF is fixed and fully tax-free; NPS is market-linked with higher growth potential but an annuity catch. Here is the honest comparison.

Side by side

FeatureNPSPPF
ReturnsMarket-linked, ~9–11%Fixed 7.1% (govt-set)
RiskLow–moderate (you pick equity mix)None (guaranteed)
Lock-inTill age 6015 years
Tax on invest80C + extra ₹50k (80CCD 1B)80C (up to ₹1.5L)
Tax at maturity60% tax-free; 40% annuity is taxedFully tax-free (EEE)
LiquidityLimited partial withdrawalsPartial from year 7

A worked example: ₹1.5 lakh a year for 25 years

At its fixed 7.1%, PPF would grow to roughly ₹1.03 crore, fully tax-free. NPS at an assumed 10% would reach roughly ₹1.6 crore — but 40% must be annuitised, and the pension is taxable. Higher expected corpus, less flexibility.

When NPS wins

You want higher long-term growth, you are comfortable with market ups and downs, and you value that extra ₹50,000 tax deduction. Best for a long horizon (20+ years to 60).

When PPF wins

You want certainty, zero risk, and completely tax-free money you can access in a pinch (partial withdrawals from year 7). A great low-risk base for every portfolio.

Project both

See what each could grow to on your contribution.

NPS Calculator →PPF Calculator →

Frequently asked

Can I invest in both NPS and PPF?
Yes, and many people do. PPF gives a fixed, tax-free base; NPS adds equity-linked growth plus an extra ₹50,000 tax deduction under 80CCD(1B) on top of your 80C limit.
Is NPS return guaranteed?
No. NPS is market-linked (a mix of equity and debt you choose), so returns vary — historically around 9–11% over long periods. PPF pays a government-set rate (7.1% now) that is fixed and guaranteed.
How is the money taxed at maturity?
PPF is fully tax-free (EEE). In NPS, 60% of the corpus is tax-free at 60; the remaining 40% must buy an annuity, and that pension is taxed at your slab.

NPS returns assumed at 10% for illustration; actual returns vary. Rates as of FY 2025-26. Estimates for planning, not financial advice.