Compare retirement savings through EPF and National Pension System.
EPF vs NPS comparison
Compare a simple EPF projection with an NPS corpus and annuity split.
EPF
Payroll-linked and often simpler for salaried employees. You and your employer each contribute 12% of basic plus DA, with statutory contributions due on wages up to ₹25,000 a month from 17 September 2026.
Interest rates are notified and the structure is familiar to most employees. The rate for FY 2025–26 is 8.25%. Part of the employer share, up to ₹2,083 a month, goes to the Employees' Pension Scheme instead of your EPF balance.
Withdrawals are generally tax-free after five years of continuous service. Interest on your own contributions above ₹2.5 lakh a year is taxable.
NPS
Market-linked retirement investing with an annuity component. You choose a pension fund and a mix of equity, corporate bonds and government securities, or a life-cycle option that reduces equity as you age.
At normal exit, non-government subscribers must use at least 20% of the corpus to buy an annuity, and government subscribers 40%. Up to 60% of the corpus can be withdrawn tax-free, and annuity income is taxed at your slab rate.
Employer NPS can have tax relevance depending on regime and limits. The employer's contribution is deductible up to 14% of basic plus DA in the new regime and 10% in the old. Your own extra contribution of up to ₹50,000 under 80CCD(1B) helps only in the old regime.
Worked Numbers
EPF: with ₹25,000 basic, you contribute ₹3,000 a month and the employer ₹3,000, of which ₹2,083 goes to EPS and ₹917 to EPF. That puts ₹3,917 a month into EPF, which at 8.25% for 25 years, with no pay rises, projects to about ₹37 lakh.
NPS: ₹10,000 a month for 25 years at an assumed 10% return projects to about ₹1.33 crore. With the 20% minimum annuity, about ₹26.5 lakh buys a pension and the remaining ₹1.06 crore can be withdrawn under PFRDA rules, but only 60% of the corpus is tax-free. The return is an assumption, not a promise.
Key Differences
Risk: EPF interest is declared each year, while NPS returns follow markets. Liquidity: EPF allows partial withdrawals for specified needs such as housing, education or medical treatment, and NPS allows limited partial withdrawals for specified reasons. Payout: EPF pays a lump sum, while NPS requires an annuity on part of the corpus.
Decision Rule
Use EPF as a baseline retirement bucket and evaluate NPS for additional retirement allocation and tax planning.
If your employer offers NPS through payroll, its contribution is one of the few deductions the new regime allows, which can make it worthwhile even for new-regime filers. Use the PF Calculator for the EPF projection, the NPS Calculator for corpus and annuity, and the Income Tax Calculator to see the tax effect.