Are you one of those people looking for investment opportunities for your parents? You can make a decision after reading this! NPS vs. SCSS vs. PPF: COMPARE!
National Pension System (NPS)
The National Pension System (NPS) is a state-offered pension system. Investing in NPS gives investors the double benefit of tax savings and retirement savings. Contribution to an NPS account provides individuals with a benefit in the form of a Section 80C deduction. It not only secures your retirement savings but also saves taxes of up to 1,50,000 rupees per year. The best part is that both private and government employees can invest in this retirement program.
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Eligibility: Anyone in the 18-65 year old group can invest here. The minimum amount to invest in their NPS account is 1,000 rupees.
Features: A person can receive an additional tax deduction of Rs 50,000 under Section 80CCD (1B). He can deduct up to 20 percent of his salary paid into the NPS for tax purposes. Interestingly, the returns made with NPS are tax exempt. The account becomes due when the investor retires or turns 60. When due, the person can withdraw up to 60 percent of the amount accumulated in the account, while the remaining 40 percent is used to purchase an annuity plan.
Interest rate: In contrast to the Public Provident Fund (PPF), Employees’ Provident Fund (EPF), Voluntary Provident Fund (VPF), the returns of the NPS are not fixed. Returns are completely market-driven and depend on the performance of your fund manager and the asset mix you choose.
Seniors Savings Program (SCSS)
The Senior Citizen Saving Scheme (SCSS) is a government-sponsored retirement plan. The aim of the program is to help seniors by ensuring a regular flow of income after retirement. It guarantees quarterly returns. The SCSS can be accessed through certified banks and post offices in India. SCSS is suitable for seniors looking for a high fixed rate of return and a steady quarterly income.
Eligibility: SCSS, the investment period is 5 years, with the option to extend it for an additional 3 years.
Features: The SCSS is a safe and reliable investment. Gives high returns compared to FD or savings account while offering tax benefits of up to Rs 1.5 lakh. The total limit is capped at Rs 15 lakh. Interest from the senior citizens’ savings program is fully taxable and must be added to income from other sources.
Interest rate: SCSS offers an interest rate of 7.4 percent per year for the current April-June quarter.
Public pension fund (PPF)
Public Provident Fund (PPF) is a savings plan offered by the central government. It was set up with the aim of offering the self-employed and employees from non-organized sectors an income security in old age. People working in the informal or non-organized sector, as well as the unemployed and the self-employed, can invest in PPF.
Eligibility: Any Indian citizen can open a PPF account either in their own name or on behalf of a minor. Only an Indian resident can only open one PPF account. NRIs are not allowed to open PPF accounts. However, a resident Indian who has become an NRI after opening an account may continue to operate the account until the due date. Parents / legal guardians can also open PPF accounts for their underage children. However, the opening of joint accounts and multiple accounts is not permitted
Features: Taxpayers can claim tax deductions of up to Rs 150,000 per year by investing in PPF. The minimum investment of Rs 500 should be made in one year. You can’t invest more than Rs.150,000 a year. The returns offered by PPF accounts are fixed and backed by government guarantees. The deposited amount is blocked for 15 years and can be paid out when it is due.
Interest: The return is 7.10 percent per year with PPF
Other details to consider
SCSS is for those who are already over the age of 60, while the other two NPS and PPF options are for those looking to build on the years leading up to retirement. SCSS accepts a deposit in multiples of Rs 1,000 up to Rs 15 lakh. An SCSS account can be opened with up to Rs 1 lakh in cash or over Rs 1 lakh by check.
