NPS or EPF: Here's how you can incubate your nest egg

Opting for both can help you build a more diversified corpus for long-term financial security

- Aprajita Sharma

For salaried individuals, retirement planning goes beyond just saving—it's about making the right choices. The National Pension System (NPS) and the Employees' Provident Fund (EPF) are two retirement schemes. While anyone can open an NPS account, one has to be in a full-time job to contribute to EPF.

Some employers now provide both, allowing employees to boost the retirement corpus while enjoying tax perks. But should you opt for both? And how does it impact your take-home salary? Let's break it down.

"Not all employers offer NPS, but if your employer does, you can request them to make employer contribution a part of your salary. You can have it along with employer and employee contribution to EPF, if you are comfortable with reducing your in-hand salary. While NPS is optional, EPF is mandatory in most cases," said Abe Abraham, partner, Cyril Amarchand Mangaldas.

Employers can contribute up to 14% of basic salary to your NPS account in the new tax regime. It is 12% in case of EPF. Employee contribution is mandatory in EPF to be eligible for employer contribution, which is generally of the same amount. NPS offers more flexibility—employees need not contribute to receive employer benefits. Employer contributions can vary, and employees can request to keep it at any level up to 14% of the basic salary.

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