NPS vs VPF: Which plan will be better for retirement
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After retirement, salary stops, but expenses do not stop. In such a situation, a huge fund is needed after retirement. So that there is no problem of expenses in old age. Regular income is very important to run this expenditure. With this, you will not have to face financial crisis. For this, there is National Pension System (NPS) and Voluntary Provident Fund (VPF). These schemes have been made for expenses after retirement. Financial security is claimed in both the schemes. Let us know what is the benefit in these two schemes
National Pension System
National Pension System (NPS) is an optional retirement savings scheme. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). In this scheme, you can invest regularly during your working age. In this way, at least 40 percent of the accumulated corpus has to be used to buy annuity. Due to which you get regular monthly income. You can withdraw the remaining 60% in lump sum on retirement.
The contribution made in NPS is invested by dividing it into debt and equity according to your age and the scheme chosen. Therefore, the return on the investment made in it is not fixed, but market linked.
Know what is VPF
VPF i.e. Voluntary Provident Fund is an extension of EPF (Employees’ Provident Fund). It is available only to those salaried people who are already registered in EPF. In this, employees can contribute up to 100 percent of their basic salary and dearness allowance. The return of VPF is fixed, which is about 8 percent to 8.5 percent annually. This is a completely government guaranteed scheme. Its money is managed by EPFO (Employees’ Provident Fund Organisation). Due to which there is no risk of any kind.
Which plan is better
If you are self-employed or want higher returns for a long period of time while still in a job, then NPS is a better option. It provides tax planning as well as retirement security. In the case of VPF, if you want to avoid risk and prefer a stable, government-guaranteed return, then VPF will be right for you.
