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PPF vs EPF vs VPF: Where Should You Invest Your Extra Retirement Savings?
M
Moneycontrol•07-10-2026, 12:46
PPF vs EPF vs VPF: Where Should You Invest Your Extra Retirement Savings?
- •EPF serves as the primary retirement vehicle for salaried employees, featuring mandatory contributions from both employee and employer with an expected interest rate of 8.25 percent for 2025-26.
- •VPF allows employees to make voluntary additional contributions through the EPF system, earning the same interest rate but with tax implications if employee contributions exceed Rs. 2.5 lakh annually.
- •PPF provides a government-backed savings alternative outside the EPF framework with a 15-year maturity period and an interest rate currently maintained at 7.1 percent.
- •Both PPF and VPF share the combined Section 80C tax deduction limit of Rs. 1.5 lakh, meaning additional investments through VPF do not offer extra deductions.
- •The ideal choice depends on liquidity needs, investment limits, and whether you prefer employment-linked savings or a diversified personal retirement fund.
Key Questions Answered
The EPFO's Central Board recommended an 8.25 percent interest rate for EPF for the 2025-26 financial year, which remains subject to government notification.
The government retained small-savings rates at existing levels for the July to September 2026 quarter, setting the PPF interest rate at 7.1 percent.
Interest relating to an employee's own contribution above Rs. 2.5 lakh in a financial year can become taxable where the employer also contributes to the fund. This threshold increases to Rs. 5 lakh in cases where there is no employer contribution.
