By Admin 
Inflation is increasing and the stability of the job is decreasing, in such a situation, the preparation for retirement is no longer a luxury, it has become a need. Two popular options in India are helping people in this direction, National Pension System (NPS) and Voluntary Provident Fund (VPF). Both schemes promise to provide financial security after retirement, but there is a big difference in their working methods, returns, tax benefits and risk.
what is NPS?
National Pension System i.e. NPS is a government, market-linked investment scheme, which is open to all Indian citizens aged 18 to 70 years, whether you are salad or self-prom. In this, you can divide investment into shares, government bonds, corporate bonds or other options as per your choice.
This scheme gives the investor the freedom to choose the fund manager and asset allocation of his choice. If you are young and are investing for a long period, then you can get better returns by investing in equity up to 75 percent through active choice. Its average annual return is considered from 8 per cent to 12 per cent.
what is VPF?
VPF is an extension of the Voluntary Provident Fund, EPF (Employees’ Provident Fund). It is only available for those salary people who are already registered in EPF. In this, the employee can contribute up to 100 % of his basic salary and dearness allowance.
VPF returns are fixed, which is about 8 percent to 8.5 percent annually and it is a fully government guarantee scheme. Its money is managed by EPFO (Employees & rsquo; Provident Fund Organization), which makes the risk zero.
Benefits of tax and withdrawal
Both NPS and VPF get tax exemption, but NPS gets an additional 50 thousand rupees under Section 80CCD (1B). At the same time, if you invest in VPF for 5 consecutive years, then interest and maturity amount gets tax-free.
VPF is more flexible in terms of withdrawal, you can withdraw money if needed after 5 years. On the other hand, NPS remains lock till the age of 60 years and it is necessary to take annuity (monthly pension) on maturity.
what is better for whom?
NPS: If you do your own business or want more returns for long periods even while in a job, then NPS is a better option. Along with tax planning, it also gives retirement security.
VPF: If you want to avoid risk and like a stable, government guarantee return, then VPF will be right for you.
Some people can also take advantage of both schemes, stability from VPF and growth from NPS.
Explain in easy language, if you are young and want to invest for long periods, then NPS can be better for you. But if you do not want to take much risk and give priority to safety, then you can choose VPF.