Calculator
EPF vs NPS: Which Builds More Retirement Wealth?
Two tabs, one answer: compare EPF's guaranteed 8.25% against NPS's market-linked returns — then see which saves you more tax on your additional ₹50,000/year.
EPF settings
CBT declared rate for FY 2025-26: 8.25% p.a.
NPS settings
EPF
Guaranteed 8.25% p.a. · EEE tax · EDLI insurance
Full EPF corpus can be withdrawn tax-free after 5 years of service. EPS pension formula: (pensionable salary × service years) ÷ 70. Pensionable salary is capped at ₹15,000/month.
NPS
Market-linked 9% · 60% tax-free · Annuity pension
At 60: withdraw 60% tax-free. Remaining 40% (₹1,33,99,608) must purchase an annuity. Monthly pension = 40% × annuity rate ÷ 12. Annuity income is taxable at slab rate.
Corpus growth year by year
At 9% annual return, NPS builds a larger corpus by retirement. EPF earns a guaranteed 8.25%; NPS is market-linked and can earn more — or less. For NPS to equal EPF's corpus, it only needs to earn 5.3% p.a. (well within historical NPS returns of 9–14%).
How the calculations work
EPF corpus formula
Your monthly EPF corpus credit = Employee EPF contribution + Employer EPF share.
Employee EPF = 12% × Basic+DA per month
Employer EPF = 3.67% × min(Basic+DA, ₹15,000)
Total monthly EPF credit = Employee EPF + Employer EPF
The employer's remaining 8.33% (of the capped wage, up to ₹1,250/month) goes to the Employees' Pension Scheme (EPS), not your EPF corpus. This is the key structural difference from NPS, where 100% of the employer contribution grows in your personal corpus.
EPF interest: 8.25% p.a. (FY 2025-26, CBT declared rate). Interest is computed monthly on closing balances and credited to your account on 31 March each year.
EPS pension formula
Your Employees' Pension Scheme pension at retirement is:
Monthly EPS Pension = (Pensionable Salary × Pensionable Service in years) ÷ 70
Pensionable Salary is the average of your Basic+DA over the last 60 months of service, capped at ₹15,000/month. Even if your salary is ₹2 lakh/month, your pensionable salary is still ₹15,000. This means the maximum EPS pension for 35 years of service is approximately ₹7,500/month — a small fraction of most people's income.
Minimum 10 years of service is required to get a monthly pension. Below 10 years, you can withdraw the EPS balance as a one-time amount (Form 10C).
NPS corpus formula
NPS uses standard start-of-period annuity compounding:
Monthly NPS contribution = (Employee % + Employer %) × Basic+DA
Corpus = Σ monthly contributions × (1 + r/12)^remaining months
At retirement (age 60): 60% can be withdrawn as a tax-free lump sum. 40% must purchase an annuity from a PFRDA-empanelled Annuity Service Provider. The monthly pension = (40% of corpus × annuity rate) ÷ 12.
If your total NPS corpus at age 60 is ₹8 lakh or less, you can withdraw 100% as a lump sum — no annuity required (PFRDA rule, updated 2025).
Breakeven NPS return
The breakeven return is computed via binary search: it is the annual NPS return that would produce exactly the same corpus as EPF, given the same monthly contribution amount. This tells you whether your NPS return assumption is optimistic, conservative, or right on the fence.
Tax benefit comparison (Tab 2)
The calculator models the tax saved under each option for a given tax regime. Marginal tax rates are applied to the deductible amount; the result includes 4% Health and Education Cess.
EPF vs NPS: feature comparison
| Feature | EPF | NPS |
|---|---|---|
| Mandatory for salaried? | Yes (establishments with 20+ employees) | No — voluntary |
| Employee contribution rate | Fixed 12% of Basic+DA | Flexible (minimum ₹500/month) |
| Employer contribution to your corpus | 3.67% of min(wage, ₹15,000) — the rest goes to EPS & EDLI | Up to 14% of Basic+DA — 100% to your corpus |
| Returns | 8.25% p.a. guaranteed (CBT declared, FY 2025-26) | Market-linked (historical Tier-I: 9–14% over 5 years) |
| Liquidity before retirement | Partial withdrawals allowed (housing, medical, education, marriage) | Restricted partial withdrawals after 3 years (specific purposes only) |
| Full withdrawal at retirement | 100% corpus — fully flexible, tax-free after 5 years of service | 60% as lump sum (tax-free); 40% must buy an annuity |
| Monthly pension | EPS pension (capped: pensionable salary ≤ ₹15,000/month) | Annuity from 40% corpus at PFRDA-regulated rate (5.5–7.5% p.a.) |
| Life insurance | EDLI: up to ₹7 lakh — employer pays, employee pays nothing | None built-in |
| Tax deduction — old regime | 80C (shared ₹1.5 lakh cap with PPF, ELSS, LIC) | 80C + exclusive 80CCD(1B) ₹50,000 + 80CCD(2) employer (no cap) |
| Tax deduction — new regime | None (80C removed in new regime) | 80CCD(2) only: employer contribution up to 14% of Basic+DA |
| Exit tax on corpus | Fully tax-free if service ≥ 5 years; EEE treatment | 60% lump sum tax-free; annuity income taxable at slab rate |
| Portability | Portable via UAN; links across employers automatically | Portable via PRAN; follows you across employers and sectors |
| Regulator | EPFO (Employees' Provident Fund Organisation) | PFRDA (Pension Fund Regulatory and Development Authority) |
| Governing law | Employees' Provident Funds and Miscellaneous Provisions Act, 1952 | Pension Fund Regulatory and Development Authority Act, 2013 |
Frequently Asked Questions
Which is better — EPF or NPS for retirement?
It depends on your goals. EPF gives a guaranteed 8.25% return (FY 2025-26), full flexibility at withdrawal, and free EDLI life insurance up to ₹7 lakh. NPS is market-linked (historically 9–14% over 5-year rolling periods), offers an exclusive ₹50,000 tax deduction under 80CCD(1B) in the old regime, and allows employer contributions up to 14% of Basic+DA to compound in your corpus with no cap under 80CCD(2). EPF wins on safety and flexibility; NPS wins on tax efficiency and potentially higher returns. → See how the formulas work
What is the EPF corpus formula?
Monthly EPF corpus credit = Employee EPF (12% of Basic+DA) + Employer EPF (3.67% of min(Basic+DA, ₹15,000)). The employer's remaining 8.33% goes to EPS (pension scheme), not your corpus. The balance earns 8.25% p.a., compounded monthly and credited annually on 31 March. → Full formula breakdown
How is EPS pension calculated?
EPS Monthly Pension = (Pensionable Salary × Service Years) ÷ 70. Pensionable salary is capped at ₹15,000/month regardless of your actual salary. Minimum 10 years of service is required for a monthly pension. Maximum monthly EPS pension for 35 years of service ≈ ₹7,500/month. → EPS formula and worked example
What is the difference between 80C, 80CCD(1B), and 80CCD(2) for NPS?
Section 80C covers EPF, PPF, ELSS, LIC and more — shared cap of ₹1.5 lakh/year, old regime only. Section 80CCD(1B) is an exclusive ₹50,000 deduction for your own NPS contribution, over and above 80C — old regime only. Section 80CCD(2) covers your employer's NPS contribution up to 14% of Basic+DA, has no rupee cap, and is available in both old and new regimes.
Should I choose VPF or NPS for additional savings?
In the old tax regime: NPS usually wins via 80CCD(1B) — an exclusive ₹50k deduction beyond 80C (which your EPF may already fill). If 80C still has room, VPF is equally efficient for that portion. In the new regime: neither VPF nor your own NPS contribution gives a tax deduction. Only employer NPS under 80CCD(2) still saves tax — making employer-contributed NPS the strongest lever in the new regime.
Can I have both EPF and NPS?
Yes. EPF is mandatory for salaried employees in establishments with 20+ employees (below ₹15,000/month Basic+DA). NPS is voluntary and can be opened additionally. Many employees use both: mandatory EPF for safe accumulation and EDLI insurance, plus NPS for additional tax-efficient savings under 80CCD(1B) and 80CCD(2).
What is EDLI insurance in EPF? Does NPS have anything similar?
EDLI (Employees' Deposit Linked Insurance Scheme, 1976) provides free life insurance to all EPF members. On death in service, the nominee receives 35 × average monthly wage (last 12 months) + 50% of average PF balance, subject to a maximum of ₹7 lakh and a minimum of ₹2.5 lakh (for 12+ months of service). The premium (0.5% of capped wage, max ₹75/month) is paid entirely by the employer. NPS has no built-in insurance equivalent.
What happens to my NPS corpus at retirement (age 60)?
At normal exit (age 60), you can withdraw 60% of your NPS Tier-I corpus as a tax-free lump sum under Section 10(12A). The remaining 40% must be used to buy an annuity from a PFRDA-empanelled Annuity Service Provider (ASP). Monthly annuity income is taxable at your slab rate. If your total corpus is ₹8 lakh or less (updated 2025 from ₹5 lakh), you can withdraw 100% with no annuity requirement.
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