Information checked in October 2026.
Retirement can feel far away at 28. That is exactly why starting early matters: compounding does most of the work. Salaried Indians have several building blocks for retirement. Here is how they compare.
Comparison table
| EPF | VPF | PPF | NPS | Equity mutual funds | |
|---|---|---|---|---|---|
| Return | 8.25% (2025-26, declared yearly) | Same as EPF | 7.1% (Oct–Dec 2026, reset quarterly) | Market-linked | Market-linked |
| Risk | Very low | Very low | Very low (government-backed) | Moderate, depending on equity share | Higher in the short term |
| Lock-in | Till retirement; partial withdrawals allowed | Same as EPF | 15 years; partial withdrawals after year 5 | Long; exit after 15 years or at 60 | None, except ELSS |
| Contribution | 12% of basic (mandatory) | Voluntary, above 12% | ₹500 to ₹1.5 lakh a year | Flexible | Flexible |
| Tax on returns | Tax-free, except interest on employee contributions above ₹2.5 lakh a year | Same rule | Fully tax-free | 60% of corpus tax-free at exit | 12.5% long-term gains above ₹1.25 lakh |
How regime choice changes the picture
Under the old regime, PPF, VPF/EPF and your own NPS contributions reduce your taxable income. Under the new regime they do not, but the returns on PPF and EPF stay tax-free. Employer NPS (up to 14% of basic) is still deductible. So under the new regime, choose these products for their safety and returns, not for tax savings.
A simple combined approach
- Let EPF run. It is your safe, automatic base. Avoid withdrawing it when you change jobs; transfer it instead.
- Add equity for growth. For a 20–30 year horizon, use index or flexi-cap SIPs, or NPS with a high equity share. Inflation is the main enemy of retirement savings.
- Use PPF for stability. It is a tax-free safe asset and works well for a self-employed spouse or for the debt part of your portfolio.
- Use VPF if you want more safe, tax-free debt and can stay within the ₹2.5 lakh employee contribution limit.
- Reduce equity gradually as retirement approaches, over the last 5–7 years.
How much do you need?
A rough starting point is 25–30 times your expected annual expenses at retirement, adjusted for inflation. For example, ₹50,000 a month in today’s money becomes much more after 25 years at 6% inflation. Online retirement calculators from AMFI or your fund house help you work out the monthly SIP needed. Review the plan every year or two.
Official sources
- Small savings rates (Ministry of Finance / India Post): indiapost.gov.in
- EPFO: epfindia.gov.in
- PFRDA: pfrda.org.in
This article is general information, not personal investment advice. Please consult a SEBI-registered investment adviser for a plan suited to you.
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