Are you a salaried professional planning to secure your future or enjoy a comfortable post-retirement life? Look no further! The world of financial planning offers two remarkable options: the Public Provident Fund (PPF) and the Employees’ Provident Fund (EPF). These investment options not only provide tax benefits but also attractive interest rates, flexible deposit amounts, and numerous other advantages.
In this blog, we will look into the differences between PPF and EPF and determine where to invest first.
Difference Between PPF and EPF
PPF and EPF both offer tax saving benefits, help in building retirement corpus and encourage savings habits; however, here are some differences between the two.
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Eligibility | Indian residents | Salaried professionals of a company registered under EPF Act |
Amount to invest |
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Tenure |
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Contributor |
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Employee and employer |
Interest rate | 7.1% | 8.5% |
Tax benefit |
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Withdrawal | Partial withdrawal is allowed after the completion of 6 financial years |
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Nature of the account | Savings scheme | Retirement-cum savings scheme |
Circumstances to withdraw the amount |
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Complete withdrawal
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EPF vs PPF- Which One to Choose?
EPF and PPF are two popular investment options that cater to individuals seeking to secure their financial future. Understanding the key features of each scheme can help you make an informed decision.
Employee Provident Fund (EPF) is specifically designed for salaried professionals. It operates as a mandatory savings scheme where a portion of your salary, is deducted and contributed towards building a retirement corpus. The advantage of EPF is that the deduction is automatic, relieving you of the need to manually save from your income. In case of unforeseen circumstances such as unemployment, you can withdraw funds from your EPF account.
On the other hand, the Public Provident Fund (PPF) is a voluntary investment option with a longer tenure of 15 years. It allows individuals to contribute a flexible amount towards building a retirement corpus. PPF also offers the benefit of obtaining a loan against the deposited amount, if needed. Furthermore, the tenure of the PPF account can be extended in blocks of 5 years beyond the initial 15-year period.
It’s important to carefully evaluate your financial goals, risk appetite, and preferences before choosing between EPF and PPF. Consider factors such as the ease of contribution, withdrawal flexibility, interest rates, and the specific benefits that align with your needs.