How EPF And NPS Together Can Secure Rs 12 Cr Retirement Corpus Without Tax Burden
While EPF offers guaranteed returns and tax-free maturity, it has limited liquidity and may not suit short-term goals. On the other hand, NPS offers higher returns through market-linked options and ultra-low management charges (0.1%), but mandates that 40% of the corpus be used to buy an annuity at retirement, which restricts full withdrawal.
Further, Bangar pointed out that individuals with a salary of up to Rs 14.65 lakh annually can remain tax-free even under the new income tax regime, if their employer contributions to EPF and NPS are optimized. Contributions of up to 12% of basic salary to EPF and up to 14% to NPS are exempt from tax.
To maximize returns, experts suggest choosing VPF for extra EPF savings, using NPS Active Choice with higher equity allocation early on, and gradually shifting to debt as retirement nears. Additionally, adopting Systematic Lump Sum Withdrawals (SLW) from NPS post-retirement can help reduce tax burden.
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