Should I go for Voluntary PF contribution? | Value Research If you are already contributing to PPF to the maximum extent possible, you can consider National Pension Scheme
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Should I go for Voluntary PF contribution?

If you are already contributing to PPF to the maximum extent possible, you can consider National Pension Scheme

In my earlier job, there was Employees Provident Fund (EPF) deduction at 12 per cent along with similar contribution from the employer. However, in the new job only a nominal amount of 1,500 is deducted per month along with similar contribution from the employer. EPF because of its illiquid nature, according to me, offers a great platform for old-age savings, which are tax efficient, secure and provide decent tax-free returns. I should have been saving about 50,000 per month in my EPF account, whereas now it is down to 3,600. My question is: what alternate recourse do I have, which is safe and tax-friendly. I can go in for VPF. I am already contributing to Public Provident Fund (PPF) to the maximum extent possible. Should I think of

  1. Voluntary PF contribution (VPF)
  2. Debt mutual funds (if yes, which one)
  3. What else could be my option

- Maneesh Gupta

Since you are already contributing to PPF to the maximum extent possible and looking for a safer, tax-friendly option, you can consider National Pension Scheme (NPS). The NPS is meant for working people who want to save money for their retirement. One can invest regularly in NPS and claim tax deduction on contributions. Apart from the tax exemption under Section 80 C of the Income Tax Act, NPS contributions also qualifies for an exclusive tax deduction of up to ₹50,000 under the new Section 80CCD(1B). The NPS offers different investment options with varying degree of risk. At 60, one can withdraw 60 per cent of the accumulated corpus and use the remaining money to buy an annuity. However, unlike EPF and PPF, withdrawal from NPS is taxed.

You seem to be extremely comfortable with schemes that offer assured returns and tax breaks to save for your retirement. However, you may be actually compromising on the returns. Equity-linked investments are best suited to fund long-term needs like retirement. Equity has the potential to offer superior returns than other assets over a long period of time.


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