Retirement Planning – Have you planned for retirement? If not, the sooner you complete it, the more you will benefit. There are many retirement planning schemes available today. The main ones are the National Pension System (NPS), the Public Provident Fund (PPF), and the Employees’ Provident Fund (EPF). While they may seem similar, there are significant differences between them. Which one is best for you?
EPF interest rate is 8.25 percent
People employed in the private sector are covered by the EPF . Under this scheme, a portion of your basic salary (plus DA) is deposited into your EPF account every month. Your employer also contributes an equal amount to your EPF account. The government announces interest on the money deposited in your EPF account every year. Currently, the interest rate is 8.25%. You receive the money deposited in your EPF account in one lump sum upon retirement. Pre-retirement withdrawals are permitted under certain circumstances.
PPF
If you are self-employed, have your own business, or have some other source of income, you can plan your retirement through the Public Provident Fund (PPF). This scheme is for 15 years. This means that if you start investing in PPF today, you can withdraw your entire amount deposited in PPF after 15 years.
The government decides the interest rate on PPF every quarter. Currently, the interest rate on PPF is 7.1%. This scheme is good from the tax point of view. The maturity amount of PPF is not taxable. Withdrawal from the scheme before maturity is allowed. You can withdraw some amount from the 7th year.
There are many options for investing in NPS
The National Pension System (NPS) is the newest of the three main retirement planning schemes. It is also quite different from the other two. The biggest difference is that it is a market-linked scheme. This means that the money you invest in an NPS account is invested in stocks, government securities, and corporate bonds.
This scheme allows investors to invest as much or as little as they wish in any one asset class. At the time of retirement, 60 percent of the money deposited in the scheme is given to you in a lump sum. The remaining 40 percent is used to purchase an annuity. This annuity provides you with a monthly pension.
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