NPS Vs PPF corpus calculation: Know how much retirement fund you can build

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New Delhi: The onset of COVID-19 has once again highlighted the necessity to adopt deeper measures to ensure adequate support for individuals in terms of their financial well-being. 

The financial well-being not only spreads accross your employment duration but even after that. The critical times that we live in has made us realise about our future planning and how well we can map it out for a good retirement fund.

It the above context that we are going to discuss about two such retirement fund plans --National Pension System (NPS) and Public Provident Fund (PPF). 

Who can open National Pension System (NPS) Account?

Any individual citizen of India (both resident and Non-resident) in the age group of 18-65 years (as on the date of submission of NPS application) can join NPS. Although, opening multiple NPS accounts for an individual is not allowed under NPS, an Individual can have one account in NPS and another account in Atal Pension Yojna.

Any individual citizen of India (both resident and Non-resident) in the age group of 18-65 years (as on the date of submission of NPS application) can join NPS. But, don't be confused with joint account.

National Pension System account can be opened only in individual capacity and cannot be opened or operated jointly or for and on behalf of HUF. 

Public Provident Fund tenure, investment limit

You can open your Public Provident Fund (PPF) account in your own name as well as on behalf of a minor. PPF is a 15-year investment scheme under which an investor enjoys tax exemption at the time of deposit, accrual of interest and withdrawal. Though PPF has a lock-in period of 15 years, you can make extension in a block of 5 years for tenures upto 20, 25 and 30 years.

The PPF Scheme, introduced by the National Savings Organization in 1968 was aimed at making small savings a lucrative investment option.

A minimum of Rs 500 and a maximum of Rs 1.5 lakh per annum can be deposited every year in a PPF account at present.  Deposits can be done maximum in 12 transactions. However, you must note that if you deposit more than Rs1.5 lakh in your PPF account per annum, the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act.

From 01.04.2020, interest rates are on PPF has been 7.1 % per annum (compounded yearly) while NPS gives an average interest of 9 percent.

Consider the following table to analyse the two funds NPS Vs PPF.

NPS vs PPF : Comparison between the retirement corpus/fund
	Sanjiv	Sahil
Investment option	NPS	PPF
Average return PA	9%	7.1%
Investment amount every year	Rs 1.5 lakh	Rs 1.5 lakh
Investment period	30 years	30 years
Investment in 30 years	Rs 45 lakh	Rs 45 lakh
Retirement corpus	Rs 1.82 crore	Rs 1.09 crore
Total fund/corpus Value	Annuity value= Rs 92 lakh One time value= Rs 1.38 crore Total value (annuity + one time)= Rs  2.30 crore	Rs 1.54 crore (Maturity Value)

The calculations are based on assumptive figures (only a rough calculation), while one is advised to check and confirm before deciding on a corpus plan. It must also be kept in mind that the interest rates on small savings scheme like PPF are revised quarterly.