Planning for retirement? Here’s how EPF, PPF and NPS compare after Budget 2026

• Budget 2026 made no changes to EPF, PPF, or NPS retirement schemes
• EPF offers 8.5% interest, tax-free withdrawals after 5 years, and loan options
• PPF and NPS offer tax benefits, flexible contributions, and partial withdrawals.

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The Union Budget 2026 may not have announced any fresh sops or changes for popular retirement schemes such as EPF, PPF and NPS, but there has been a series of reforms in recent years to streamline taxation and strengthen long-term retirement security.

We look at the popular contributory retirement savings schemes backed by the Government of India —namely, Employees’ Provident Fund (EPF), Public Provident Fund (PPF), and the National Pension System (NPS)— to understand their features, benefits, as well as deductions that apply for members under the new and old tax regimes.

Employees Provident Fund - EPF

The EPF is a government-backed interest-bearing retirement savings scheme for private-sector salaried employees earning over Rs 15,000 a month, where employees contribute 12 percent of basic pay (up to Rs 1,800), and employers match the contribution.

The Employees’ Provident Fund Organisation (EPFO) has set the EPF interest rate at 8.5 percent for FY 2025–26, credited to active member accounts. EPF normally matures at age 58, enabling full withdrawal, while unemployed members can withdraw up to 75 percent of their balance after one month without work.

Members who have completed five years of contribution to the pension fund can also opt for 50-90 percent loans of the total balance of EPF as collateral. Tax applies if an employee’s annual contribution exceeds Rs 2.5 lakh. Withdrawals are tax-free after five years, while premature withdrawals attract 10% TDS on amounts above Rs 50,000, subject to exemptions for cases such as illness or job loss.

Public Provident Fund - PPF

The Public Provident Fund (PPF) is another government pension scheme for all residents of India, wherein employment is not a factor. Individuals can open an account through banks or post offices and earn 7.1% annual interest on investments ranging from Rs 500 to Rs 1.5 lakh per financial year, made either as a lump sum or in instalments.

A pension fund comes with a maturity period of 15 years to get full retirement benefits. Partial withdrawals of up to 50 percent of the balance are allowed after five years. Members can also avail loans by using the PPF balance as collateral after three years of investment.

Similar to EPF, PPF also enjoys an exempt–exempt–exempt (EEE) tax status. Contributions qualify for tax deduction under Section 80C, interest earned is tax-free, and the maturity amount or withdrawals are fully exempt from income tax.

National Pension System - NPS

The National Pension Scheme (NPS) is a government-backed, market-linked retirement savings programme for salaried employees and self-employed individuals, as well as NRIs. The pension fund is unique for its account types, offering Tier I as a mandatory retirement account and Tier II as a voluntary account.

Investment in NPS is allocated across equity, corporate debt, government securities, and alternative assets, based on the subscriber’s choice of active or auto investment options. Contributions are flexible, with a minimum of Rs 1,000 per year for Tier I, and returns depend on market performance.

NPS matures at the age of 60. On retirement, subscribers can withdraw up to 60 percent of the accumulated corpus as a lump sum, while the remaining 40 percent must be used to purchase an annuity plan.

Unlike EPF and PPF, the NPS does not offer collateral loan benefits to subscribers. Partial withdrawals of up to 25 percent of the subscriber’s own contributions are permitted after three years, while premature exit before 60 is allowed under certain conditions.

NPS has become attractive for various tax benefits available to subscribers under Sections 80CCD(1), 80CCD(1B) and 80CCD(2). On maturity, members can withdraw up to 60 percent as a lump sum, and it is tax-free, while annuity income is taxed as per the applicable income tax slab.