PF vs NPS Calculator: Compare What You Can Actually Spend

EPF is a guaranteed, defined-contribution provident fund managed by the EPFO, earning a declared rate, 8.25 percent for FY 2024-25, that is fully tax-free at maturity under the EEE regime. NPS is a market-linked pension scheme regulated by the PFRDA, investing across equity and bonds for potentially higher but not guaranteed returns.

The crucial difference is at retirement: your entire EPF corpus is yours, tax-free and liquid, whereas NPS forces you to lock a minimum portion into an annuity that pays a pension taxed as income. This is why comparing them fairly means looking at usable value, not just the headline corpus each produces.

Because the two corpuses are not equally usable. When you compare a projected EPF corpus with a projected NPS corpus, NPS almost always looks bigger simply because you assume a higher market return for it.

But that comparison hides two things. First, NPS forces you to lock part of the corpus into an annuity you can never access again, whereas all of EPF is liquid.

Second, the NPS pension is taxed as income every year, while EPF is entirely tax-free. Once you net NPS down to its tax-free lump sum plus the after-tax value of its pension, the apparent advantage shrinks considerably. Usable value is the only fair basis for comparison.

Under the PFRDA Amendment Regulations 2025, the exit structure for many non-government NPS subscribers changed. Previously you could take 60 percent as a lump sum and had to annuitise 40 percent.

Now the lump sum can be as high as 80 percent, with a minimum of 20 percent annuitised, and in certain corpus-threshold cases a 100 percent lump sum is allowed. If your total corpus is 5 lakh or less, you can withdraw the entire amount without buying any annuity. This gives more flexibility than before, but the annuity portion you do keep is still locked for life and its pension is still taxed at your income slab.

EPF follows the EEE model: contributions, interest, and the maturity amount are all tax-free after five years of continuous service, though interest on employee contributions above 2.5 lakh a year is now taxable. NPS follows the EET model.

Contributions may be deductible, growth is tax-free, but at exit only the lump sum is tax-free while the annuity pension is taxed as income every year of retirement at your slab. This yearly tax on the pension is a significant, often overlooked drag on NPS. It is the reason a larger NPS corpus does not translate into proportionally larger spendable income, and why this calculator taxes the pension before comparing.

Yes, profoundly. In 2026 the new tax regime is the default.

Under it, the popular Section 80CCD(1B) deduction of up to fifty thousand rupees for NPS is not available, and neither is the 1.5 lakh under Section 80C. This strips NPS of its main personal tax advantage.

Only the employer’s NPS contribution under Section 80CCD(2) still gives a deduction in the new regime. So if you are in the new regime, NPS must justify itself purely on investment returns, competing directly with EPF’s guaranteed tax-free rate and with more liquid mutual funds. The tax edge that made NPS attractive to many people only exists if you choose the old regime.

Section 80CCD(1B) is an exclusive tax deduction of up to fifty thousand rupees a year for investment in NPS, available over and above the 1.5 lakh limit of Section 80C. At a 30 percent tax slab, it saves about fifteen thousand rupees in tax each year, which is a genuine, recurring advantage that no mutual fund or other instrument offers.

However, and this is critical, it is only available in the old tax regime. In the new regime, which is the 2026 default, this deduction does not exist. Many people continue to believe NPS gives them this tax break without realising they have moved to a regime where it no longer applies.

For most salaried people the honest answer is both, not either. EPF should be your guaranteed, tax-free base, which you never skip.

NPS can sit on top as a market-linked growth layer, particularly valuable in the old regime for its extra tax deduction. They are layers, not substitutes, and together they build a larger, more diversified retirement pot than either alone.

The real decision is usually how to split your contributions between them, based on your risk appetite, your tax regime, and how much certainty versus growth you want. This calculator helps by showing the usable value of each so you can decide the balance that fits you.

NPS has the potential for higher returns because it invests in equity and bonds, historically delivering 9 to 12 percent for equity-tilted accounts versus EPF’s 8.25 percent. But higher potential comes with real market risk, whereas EPF’s rate is guaranteed.

You cannot treat NPS’s higher assumed return as certain the way you can with EPF. Over long horizons the equity exposure in NPS often does produce a bigger pot, but the outcome is variable, and part of it is locked into a taxed annuity.

So NPS may win on returns if markets deliver, but EPF wins on certainty, tax-free status, and liquidity. The right balance depends on how much risk you can tolerate.

At retirement, NPS requires you to use a minimum portion of your corpus to buy an annuity, an insurance product that pays a monthly pension for life. Under the PFRDA 2025 rules, the minimum is 20 percent, down from the earlier 40 percent, with up to 80 percent taken as a tax-free lump sum, and a full withdrawal allowed if the corpus is 5 lakh or less.

The annuity portion is locked permanently, cannot be accessed as a lump sum, yields a modest rate around 6 percent, and its pension is taxed as income. This compulsory annuitisation is NPS’s defining constraint and the main reason its usable value is lower than its headline corpus.

This is the real question most savers face once basic EPF is running. Voluntary Provident Fund earns the same guaranteed, tax-free EPF rate with full liquidity at maturity and no annuity.

NPS offers higher potential growth and, in the old regime, the extra 80CCD(1B) deduction, but with market risk and the compulsory annuity. If you value certainty, want full liquidity, and already have equity exposure through mutual funds, VPF often wins on a risk-adjusted basis.

If you want more equity growth and the tax deduction applies to you in the old regime, NPS can edge ahead. There is no universal answer; model both against your own situation before deciding.

Largely yes, under the EEE regime, provided you complete five years of continuous service. Contributions, the interest earned, and the final maturity amount are all exempt from tax, which is a powerful advantage.

There is one important exception introduced in recent years: interest on your own contributions above 2.5 lakh in a financial year is taxable, which affects high earners making large voluntary contributions. For the vast majority of salaried people contributing normal amounts, the corpus remains fully tax-free. This EEE status is a major reason EPF is so valuable and why its usable value equals its full corpus, unlike NPS where the pension is taxed.

NPS is designed as a locked retirement product, so early access is restricted. You can exit before 60 after completing at least three years, but the rules are stricter: you must annuitise a larger share, typically 80 percent, and can take only 20 percent as a lump sum, the reverse of the normal retirement split.

Partial withdrawals of up to 25 percent of your own contributions are allowed for specific needs like education, marriage, medical treatment, or buying a home, after three years, and these are tax-free. But NPS is fundamentally illiquid compared to EPF, whose corpus can be withdrawn in full at retirement or accessed earlier under various EPFO conditions. Treat NPS money as committed until 60.

Annuity rates in India are modest, typically around 6 percent a year, and vary by the annuity type you choose and prevailing interest rates. On a 40 lakh annuitised amount, a 6 percent annuity pays about 2 lakh a year, or roughly 16,600 a month gross, before tax.

Because this pension is taxed at your income slab, the net amount is lower still, perhaps 11,600 to 14,000 a month depending on your slab. Some annuity options return the purchase price to your heirs, which lowers the rate further. The modest yield and the income tax are why the annuitised portion of NPS delivers less usable value than the same money would as a flexible, tax-free lump sum.

Employer contribution works differently between the two. In EPF, employer contribution is mandatory for covered employees, matching your contribution as part of the statutory scheme.

In NPS, employer contribution is optional and depends on whether your company offers a corporate NPS benefit. Where it exists, the employer’s NPS contribution under Section 80CCD(2) is deductible in both the old and new tax regimes, making it the one NPS tax benefit that survives in the new regime. If your employer offers NPS on top of EPF, that employer contribution is genuinely valuable and worth taking, since it is extra retirement money with a tax break that does not reduce your take-home pay.

Use a realistic long-term figure based on your equity allocation. An aggressive NPS account with the maximum 75 percent equity has historically returned about 11 to 13 percent over ten-year periods, while a more balanced allocation returns less.

For conservative planning, 10 percent is a sensible assumption, and you should stress-test lower outcomes because the return is not guaranteed. Remember that NPS reduces equity automatically as you age through its glide path, which lowers returns in later years.

Do not assume an optimistic 12 or 14 percent and treat the resulting corpus as certain, because unlike EPF’s guaranteed rate, NPS can underperform. A moderate assumption gives a more honest comparison against EPF’s fixed return.

Most PF versus NPS calculators simply project two corpus figures at rates you choose and let NPS win. This one compares what you can actually spend.

It nets NPS down to its tax-free lump sum plus the after-tax value of its pension under the current PFRDA 2025 exit rules, with a tunable annuitisation from the new 20 percent floor, an annuity rate, and your retirement tax slab. It is fully regime-aware, correctly zeroing the 80CCD(1B) deduction in the new 2026 default regime.

It flags that NPS returns are not guaranteed like EPF, and frames the real VPF-versus-NPS decision for your extra savings. It turns a flattering headline comparison into an honest, usable-value verdict.