NPS Vatsalya Vs PPF: Which One Is Better?

When it comes to long-term financial planning, choosing the right investment scheme is crucial. Two popular options in 2025 are the NPS Vatsalya Scheme and the Public Provident Fund (PPF). While PPF offers guaranteed returns and safety, NPS Vatsalya is a market-linked scheme aimed at higher growth. Both cater to different financial goals, making it important to understand their features and benefits before deciding which one aligns with your needs.

The NPS Vatsalya Scheme, introduced in September 2024, is a government-backed pension plan designed for minors. Managed by the Pension Fund Regulatory and Development Authority (PFRDA), the scheme promotes disciplined savings for a secure financial future. It automatically converts to a regular NPS Tier 1 account once the minor turns 18, ensuring long-term financial stability.

To further diversify your portfolio, consider investing in a Bajaj Finance Fixed Deposit, which offers assured returns of up to 7.30% p.a. and flexible tenures ranging from 12 to 60 months. This can complement your NPS savings, ensuring both growth potential and guaranteed income. Start exploring today for a balanced financial strategy!

Investment type

NPS Vatsalya is a market-linked investment option that allocates funds to equities, corporate bonds, and government securities. This partial market exposure provides the potential for higher returns compared to traditional savings schemes, making it suitable for long-term growth.

Contribution

The scheme requires a minimum contribution of Rs. 1,000 per year, with no upper limit. Parents or guardians can invest in lump sums or periodic payments, offering flexibility for diverse financial situations.

Withdrawal and exit rules

• Before age 18: Partial withdrawals of up to 25% of contributions are allowed after three years for specific purposes like education or medical emergencies.
• After age 18: At least 80% of the corpus must be reinvested in an annuity plan, while 20% can be withdrawn as a lump sum. If the total corpus is Rs. 2.5 lakh or less, the entire amount can be withdrawn.

To ensure stability and a guaranteed income alongside your NPS Vatsalya savings, you can explore Bajaj Finance Fixed Deposits. With attractive interest rates of up to 7.30% p.a. and flexible tenures, these are a reliable option to balance your financial portfolio effectively. Open FD. 

The Public Provident Fund (PPF) is a long-standing, government-backed savings scheme offering guaranteed returns. With its low-risk nature, PPF is a preferred choice for conservative investors aiming for steady growth. The scheme has a tenure of 15 years, with the option to extend in five-year blocks.

Investment type

PPF is a completely risk-free investment option, offering guaranteed returns. The funds are not linked to the market, making it ideal for those seeking stable and predictable growth.

Returns

The current PPF interest rate stands at 7.1% per annum (subject to quarterly revision by the government). While the returns are lower compared to market-linked schemes, they are assured and consistent.

Tax benefits

PPF enjoys an Exempt-Exempt-Exempt (EEE) tax status. Contributions, interest earned, and maturity proceeds are all tax-free, making it a highly tax-efficient savings tool.

Contribution limits

Investors can contribute a minimum of Rs. 500 and a maximum of Rs. 1.5 lakh per financial year. Contributions can be made in a lump sum or in instalments, offering flexibility.

Withdrawals

• Partial withdrawals: Allowed from the seventh financial year for specific needs.
• Premature closure: Permitted under special circumstances like medical emergencies or higher education.
• Maturity: The entire corpus can be withdrawn after 15 years, with the option to extend the tenure.

Additionally, you can consider diversifying your savings with a Bajaj Finance Fixed Deposit. Offering assured returns of up to 7.30% p.a. and customisable tenures, it is an excellent choice for ensuring both stability and growth in your financial plan. Check latest rates. 

While both NPS Vatsalya and PPF are long-term savings schemes, they cater to different financial goals. NPS Vatsalya focuses on retirement planning with higher growth potential due to its market-linked nature. In contrast, PPF is ideal for risk-averse investors seeking guaranteed returns. Additionally, NPS Vatsalya has flexible contribution limits, while PPF has a fixed annual ceiling.

Here is a comparative overview of NPS Vatsalya and PPF:

Choosing between NPS Vatsalya and PPF depends on your financial goals and risk appetite. If you are looking for guaranteed returns and tax efficiency, PPF is a reliable option. On the other hand, if you aim for long-term growth with higher returns, NPS Vatsalya is better suited for your needs. 

To balance your portfolio, consider diversifying with a Bajaj Finance Fixed Deposit, which offers assured returns of up to 7.30% p.a. and flexible tenures ranging from 12 to 60 months. Start your journey towards financial security today by exploring these options. Open FD.