NPS vs PPF for retirement — which should you pick?

Both are long-term retirement vehicles with tax breaks, but they behave very differently. The Public Provident Fund (PPF) is government-backed, currently pays around 7.1% (National Savings Institute), and is completely tax-free at every stage — you put in, it grows, and you withdraw, all without tax. The National Pension System (NPS) is market-linked: you choose how much goes into equity and debt, so it can earn more over decades but the return isn't fixed or guaranteed (PFRDA / NPS Trust).

The tax angle is where NPS pulls ahead for many salaried people. On top of the ₹1.5 lakh you can claim under Section 80C, NPS gives an extra ₹50,000 deduction under Section 80CCD(1B) that no other product offers — but only if you're on the old tax regime, where these deductions apply. Check whether the old regime is even right for you first with the old vs new tax regime guide, and size the 80C bucket with the 80C calculator.

The catch with NPS is what happens at retirement. PPF gives you the whole maturity amount to do as you like. NPS forces a compromise: at 60 you can take up to 60% as a tax-free lump sum, but the remaining 40% must buy an annuity — a monthly pension that is itself taxable as income, and whose rates are often modest. So NPS trades higher growth potential and a bigger tax break for lower flexibility and a compulsory pension at the end.

For most people this isn't really a contest — it's a portfolio. PPF is the safe, tax-free anchor you can rely on to the rupee; NPS is the growth engine with the extra deduction and a built-in nudge to leave the money untouched until 60. Project each with the PPF calculator and the NPS calculator, then decide the split based on how much market ups and downs let you sleep at night.