When it comes to long-term savings and retirement planning, two popular government-backed options in India are the Public Provident Fund (PPF) and the Employee Provident Fund (EPF). Both schemes encourage disciplined savings, but they cater to different types of investors and serve distinct purposes. Let’s explore the key features of each, compare them, and highlight important considerations for life insurance planning.
What Is EPF?
The Employee Provident Fund (EPF) is designed for salaried employees. Managed by the Employees’ Provident Fund Organisation (EPFO), this fund mandates contributions from both the employee and the employer. Currently, both parties contribute 12% of the employee’s basic salary and dearness allowance towards the EPF account each month.
Key Features of EPF
Mandatory Contribution:
All salaried employees drawing a basic salary up to ₹15,000 per month must contribute to EPF. Employers also match this contribution.
Interest Rate:
The government declares the EPF interest rate annually. As of 2025, the rate stands at 8.15% per annum (tax-free). This rate can vary year to year.
Withdrawal Rules:
Partial withdrawals are allowed under specific circumstances, such as buying or constructing a house, medical emergencies, or education. For a complete withdrawal, an employee must resign and remain unemployed for two months. This process is referred to as EPF withdrawal.
Tax Benefits:
Contributions made by the employee are eligible for deduction under Section 80C of the Income Tax Act. The interest earned and the maturity amount are also tax-free, provided certain conditions are met.**
EPFO Claim Status:
When an employee initiates a withdrawal or transfer request, they may track their EPFO Claim Status online through the EPFO portal.
What Is PPF?
The Public Provident Fund (PPF) is a voluntary savings scheme open to all Indian residents, including self-employed professionals, businessmen, and salaried individuals. Unlike EPF, there is no employer contribution. Investors open a PPF account at designated banks or post offices and contribute a minimum of ₹500 per year, up to a maximum of ₹1.5 lakh per year.
Key Features of PPF
Flexible Contribution:
Investors can deposit any amount between ₹500 and ₹1.5 lakh in a financial year. They may choose to deposit in lump-sum or via instalments (up to 12 instalments per year).
Interest Rate:
The government reviews and sets the interest rate quarterly. For 2025, the PPF interest rate is 7.1% per annum (compounded annually and tax-free).
Lock-in Period:
PPF has a fixed lock-in period of 15 years. Partial withdrawals are allowed after the sixth year, subject to limits. Investors may also take a loan against the balance from the third to the sixth year.
Tax Benefits:
Contributions up to ₹1.5 lakh in a financial year qualify for a deduction under Section 80C. Interest earned and maturity proceeds are exempt under Section 10(11).**
Accessibility:
Anyone can open a PPF account, regardless of employment status. This makes it popular among self-employed individuals seeking stable, long-term returns.
When to Use a PPF Calculator?
To plan investments and estimate maturity amounts under PPF, one may employ a PPF calculator. By inputting variables such as annual contribution, tenure, and interest rate, this tool provides a clear picture of expected returns. This is especially useful for budgeting and long-term financial planning, including premiums for life insurance.
PPF vs EPF: Key Comparisons
Here is a holistic comparison of EPF vs PPF for your consideration:
Feature
| EPF
| PPF
|
Eligibility
| Salaried employees
| Open to all Indian residents
|
Contribution
| Fixed 12% of basic pay + employer contribution
| Flexible: ₹500–₹1.5 lakh per year
|
Interest Rate
| Declared annually (8.25% in 2025)
| Declared quarterly (7.1% in 2025)
|
Lock-in Period
| Till retirement/cessation of employment
| 15 years
|
Partial Withdrawal
| Allowed for specific reasons
| After 6 years, limited withdrawal
|
Loan Facility
| After 5 years of service
| Loan from the 3rd to the 6th year
|
Tax Benefits
| Section 80C; interest & maturity tax-free**
| Section 80C; interest & maturity tax-free**
|
Difference Between EPF and PPF
While they are both great savings options, here are a few key differences you should know:
Nature of Scheme:
EPF is an employee-employer fund for salary earners. PPF is a voluntary scheme for all individuals.
Contribution Structure:
EPF has a mandatory, fixed contribution, whereas PPF contributions are flexible within annual limits.
Lock-in and Withdrawal:
EPF funds remain locked until employment ends (with specific exceptions), while PPF has a fixed 15-year lock-in with partial withdrawals possible after year six.
Interest Rate Variability:
EPF rates may be slightly higher but are set once a year. PPF rates are adjusted every quarter.
Suitability:
EPF suits regular salaried professionals. PPF appeals to self-employed and unorganised sector individuals.
EPF Withdrawal: Important Considerations
Employees may opt for EPF Withdrawal in specific scenarios, some of which are:
Home Purchase or Construction:
After five years of continuous service.
Medical Emergencies:
For critical illnesses of self or dependents.
Education:
To meet educational expenses.
Marriage:
To cover wedding costs.
Before withdrawing EPF, one must ensure proper documentation and employer verification. For complete withdrawal, employees should check their EPFO Claim Status online and follow instructions to transfer or withdraw accumulated funds.
Integrating EPF and PPF with Life Insurance
For comprehensive financial planning, combining provident funds with life insurance policies can be beneficial. While EPF and PPF build a retirement corpus, life insurance provides financial protection to dependents in case of unforeseen events. Consider the following:
Term Insurance Alongside EPF/PPF:
A pure term life insurance plan offers high cover at a low premium. Use funds estimated via PPF or EPF balances, to pay premiums comfortably.
Endowment Plans:
Endowment policies offer a mix of insurance and savings. Premium investments complement PPF contributions and EPF accumulations.
ULIPs (Unit-Linked Insurance Plans):
ULIPs offer market-linked returns. Combining ULIPs with EPF and PPF can ensure a diversified portfolio.
Steps to Optimise Your Savings
Here is how you can make the most of your savings:
Step 1. Assess Income and Expenses:
Understand monthly outflows and expected savings. Dedicate a portion to EPF (for salaried) or PPF (for self-employed).
Step 2. Determine Insurance Cover:
Based on family size, liabilities, and future needs, select an appropriate life insurance policy.
Step 3. Schedule Contributions:
For PPF, choose between annual lumpsum and instalments. For EPF, maintain uninterrupted contributions through employment.
Step 4. Use Online Tools:
A PPF calculator and EPF projection tools can help forecast future values and help you plan accordingly.
Step 5. Monitor EPFO Claim Status:
Regularly check your EPF account for compliance and timely credit of contributions. This ensures you can plan withdrawals when necessary.
Step 6. Review and Rebalance:
Periodically review returns on PPF and EPF. If interest rates change, consider increasing contributions to match financial goals.
Claim Status: Tracking Your Funds
To ensure your EPF contributions are up to date and to track any withdrawal request, follow these steps:
Step 1. Visit the EPFO member portal.
Step 2. Log in using your Universal Account Number (UAN) and password.
Step 3. Click on the “Track Claim Status” option.
Step 4. Enter the required details, such as member ID and claim number.
Step 5. View the current status of your EPF withdrawal or transfer request.
Timely tracking ensures that any discrepancies in contributions or delays in claim processing are addressed swiftly.
In summary, both EPF and PPF are excellent options for building a retirement corpus in India. The difference between EPF and PPF lies primarily in eligibility, contribution flexibility, and lock-in periods. For salaried employees, EPF is mandatory and offers a steady, tax-free return. For self-employed individuals and those seeking flexible contributions, PPF is an attractive choice.
By pitting PPF vs EPF, one can make informed decisions about where to allocate funds. Leveraging tools, such as a PPF calculator and monitoring EPFO Claim Status, can ensure that savings grow optimally. When combined with a suitable life insurance policy, these government schemes can create a robust financial safety net for you and your dependents.
Always consult a financial advisor to personalise your investment and insurance strategy. With disciplined savings in EPF or PPF and the right life insurance cover, you can secure a stable future and peace of mind.
**Tax exemptions are as per applicable tax laws from time to time.
Customers 
Distributor 
Partner with Us 
Employee 
