![PPF is a long-term savings scheme managed by the government. PPF is a long-term savings scheme managed by the government.](https://images.news18.com/ibnlive/uploads/2021/07/1627283897_news18_logo-1200x800.jpg?impolicy=website&width=510&height=383)
PPF is a long-term savings scheme managed by the government.
If you are also confused about choosing any of these two options, know the pros and cons of PPF and NPS.
If you want to secure your future financially, you need to have funds ready. If you are working and don’t want to take too much risk, then apart from PF, there are two other very good options that you can use to prepare for your retirement. There are two options: PPF (Public Provident Fund) and NPS (National Pension System). Sometimes, people get confused about which of these two options to choose from. If you are also confused about choosing any of these two options, know the pros and cons of PPF and NPS.
PPF
PPF is a long-term savings scheme managed by the government. It is considered to be the better option to save money for retirement. According to experts, PPF can be considered a safer investment option. It is a long-term savings scheme that offers a fixed rate of return prescribed by the government.
There is no upper limit on the amount of investment in PPF. Its tenure is 15 years where Rs 500 to Rs 1.5 lakh can be invested in a PPF account annually. Investing in PPF is also better from the point of view of tax saving. Because there is no tax on the amount invested and the interest received. As per section 80C of income tax, this amount is tax-free.
Anyone who is an Indian citizen and above 18 years of age can open a PPF account and invest in it. The scheme does not apply to Non-Residents of India (NRIs) or Hindu Undivided Families (HUFs). One can have only one PPF account in his name and joint accounts are not allowed. One can open an additional PPF account for someone incompetent or a minor.
NPS
The NPS is a voluntary retirement savings scheme. It is a government scheme that allows citizens to invest in their future during their working life. Sixty percent of the investment in the NPS can be taken away at the time of retirement. The remaining 40 percent is used to buy a pension plan. The NPS is not a fixed-return investment. The return on the NPS is tied to the market risk. Up to 20 percent of the employee’s salary can be invested in the NPS.
The NPS is open to any Indian citizen between the ages of 18 to 70. One can avail of the benefits by joining the scheme and investing in it regularly.
The following are the criteria for investing in this scheme:
1) You must be between 18 and 70 years of age when you apply for POP/POP-SP.
2) The account holder must provide relevant documents for the Know Your Customer (KYC) requirements.