Neil Borate’s Post

The only challenge is the overall capping of ₹7.5 lakhs for PF and NPS. That means there is a capping beyond CTC of ₹57.7 lakhs (assuming 50% is basic). 12% PF on basic - ₹ 3.46 lakhs 14% NPS on basic - ₹ 4.04 lakhs But even with these points - everyone should ensure contribution of ₹7.5 lakhs. Other benefits: A. If we see IRR of this investment - we are receiving tax shield in year 1, and you earn returns on full amount over time B. Lower charges compared to MFs And after 5 years, NPS has similar withdrawal rules like PF - Housing loan, education, etc. - upto 25%. This is not known to many contributors.

IMO, the comparison should also : 1. Consider that longer tenure CAGR of equity NPS is lower than benchmarks by 1% atleast. 2. Extend the years to 85 or 90 (life expectancy) rather than 60. 3. There is only limited flexibility wrt annuity subscription. If the interest rates are lower then annuity rates is also lower. An employee can invest via VPF too and hence not restricted to the 12% limit. For certain emergencies PF fund can be accessed.

Neil in my experience, many companies including MNCs are not very NPS friendly. Though they give tht option, they indirectly want employees to contribute to PF. Two, an employee still have to maintain tht PF account and which they cannot close until they reach 60 or they are unemployed for 60 days. I personally feel that employees shud have a separate NPS account and contribute to it individually than link it to their employers

Is employer bound to pay 12% of basic as pf contribution always? Or employer only needs to match what employee pay? Question is because employer contri to pf is part of your ctc , so if you decide to only pay the minimum pf and move that money to employer NPS, would employer be still paying 12 % basic as pf contribution?

Well 14% is for central govt employees. Not for private employees. For them the limit is 10%. Correct me if I'm wrong

NPS vs. EPF in the new tax regime—definitely an interesting shift! The higher employer contribution in NPS makes it tempting, but liquidity concerns still make EPF a solid choice for many. The flexibility of keeping NPS even after switching jobs or going solo is a big plus. Would love to hear others' thoughts—are you leaning towards NPS, EPF, or a mix of both?

that line "25% on your contribution" is the problem. That means employer contribution is not withdrawable. Am I correct?

What about if you can move from being self employed to work for a company? Is it possible to keep the same NPS account and employer can contribute 14% if the basic as NPS contribution

Great insights, Aprajita! NPS does offer significant tax advantages, especially for employer contributions. However, just a small correction—under the new tax regime, employer contributions to NPS (up to 10% of salary for private sector employees and 14% for government employees) remain tax-exempt, but employee contributions do not get any additional deduction under Section 80CCD(1B) since most exemptions and deductions are not available in the new regime. Also, while EPF contributions up to ₹2.5 lakh remain tax-free, NPS enjoys an EEE (Exempt-Exempt-Exempt) status with tax-free withdrawals up to 60% of the corpus. That said, the portability and long-term retirement benefits make NPS a strong option, especially for individuals looking beyond EPF. Thanks for sharing this!

NPS as a retirement tool is great, but I have some reservations based on my personal experience. My first company offered EPS, but subsequent employers did not. Now, I'm facing difficulties transferring my PF to my current account due to this mismatch, and despite my efforts, Employees' Provident Fund Organisation ( EPFO ) hasn't been helpful. The high rejection rate and complexity of the process government organisation follows, have discouraged me from exploring NPS, as I worry about the potential hassle for my family. While NPS may offer benefits, these administrative challenges are significant deterrents for me.