New Delhi | Jagran Business Desk: Retirement funds are required to meet the financial expenses and needs of a person post his or her retirement. It is advised to start saving for retirement funds from the starting of a job so that when a person retires, he or she has a good amount of money saved as a retirement fund.   

There are many investment schemes in the market for investment plans. Some of the most prominent are - Employees Provident Fund (EPF), Public Provident Fund (PPF), Voluntary Provident Fund (VPF) and National Pension System (NPS).

Most of these schemes are long-term deposit plans and offer high returns. It is necessary for any customer to know all these schemes in depth while choosing one of these investment plans. This way the customer will find out which is the most accurate plan for him.

Here are the different retirement plans:

EPF (Employees Provident Fund)

Every company with more than twenty employees is required to contribute to the provident fund of its employees. 12 per cent of an employees’ basic salary and DA is deposited in the employee's PF account by the employee and the same amount by the company. The EPF also includes pension funds, which is provided to the employee after retirement. The rate of interest on EPF in the current quarter is 8.5 per cent. In certain circumstances, investors can withdraw from their EPF account before its maturity.

VPF (Voluntary Provident Fund) 

VPF is the expansion of EPF only. This means that investors can go for VPF only when they have an EPF account. Like EPF, VPF also offers 8.5 per cent interest. If the employee deposits more than 12 per cent of his basic salary and DA in the PF fund, then it is called VPF or Voluntary Provident Fund. Any salaried employee can deposit his basic salary and DA up to 100 per cent in VPF. Under this scheme, an investor can increase his contribution to EPF and get a much larger return in the long run.

PPF (Public Provident Fund)

Public provident fund (PPF) is a very good investment option for creating a retirement fund. PPF is a government-backed savings scheme. The most important thing about PPF is that it comes with EEE status. That is, there are three levels of interest subvention in this investment scheme. In this scheme, the maturity amount and interest income are also tax-free. An investor can save income tax of Rs 1.5 lakh every year by investing in this scheme. The scheme comes with a lock-in period of 15 years, that can also be extended further. Currently, the interest rate on PPF is 7.1 per cent. Those who want to invest risk-free and do not want to choose a long-term investment option like NPS or VPF can invest in PPF.

NPS (National Pension System)

It was launched mainly in the year 2004 for government employees. It was reopened in 2009 for general citizens as well. People between 18 and 60 years of age can invest in the National Pension System. Accounts can be opened under this scheme by going to all government and private banks across the country. NPS is managed just like a mutual fund. Due to this, very good returns can be obtained from this investment option. In NPS, the investor has to deposit some amount every month during his job. Investors can withdraw a portion from the fund prepared after retirement and take an annuity from the remaining amount for regular income.

There are three ways to invest in NPS. First equity, second corporate bond and third government securities. In the NPS, the investor gets two options to determine his investment. First is asset allocation and second is Auto Choice. Auto Choice initially gets a 50 per cent share in equity and decreases over time. At the same time, in asset allocation, an investor can invest up to 75 per cent in equity.

Posted By: Talib Khan