Provident Fund (PF) is a saving scheme that aims to cushion employees and their families, especially when they retire from service. It helps individuals acquire some amount of savings through periodic savings before they reach their retirement age. In India, there are three main types of PF accounts: Some of the recognized funds include the Employees’ Provident Fund (EPF), General Provident Fund (GPF), and Public Provident Fund (PPF).
General Provident Fund (GPF)
GPF is a fund that is meant for the use of government employees only. Any individual who has served in the government for a year or more can be eligible to open a GPF account. Each employee makes a mandatory contribution of a least 6% of his/her salary to the fund every month. The interest rate in GPF is determined by the government every quarter and for now, is set at 7.1%.
Employees’ Provident Fund (EPF)
EPF is for private sector employees and is governed by the Employees Provident Fund Organization (EPFO). Both the employee and employer make a 12% contribution to the employee’s basic salary and dearness allowance. One portion of their contribution goes towards the Employees’ Pension Scheme (EPS). EPF currently provides an interest rate of 8.25%. They can also apply for partial withdrawal for some purposes such as medical bills or your wedding.
Public Provident Fund (PPF)
PPF is an optional savings scheme, which is open to all its citizens of India and is not restricted to employees. It is going to allow individuals to fund between ₹500 and ₹1,50,000 every year. The account matures after 15 years but can be renewed in equal instalments of five years. Partial withdrawals are permitted after seven years. The current interest rate on PPF is 7.1%, which the government adjusts every quarterly period.
Conclusion
Each of the funds has specific features: GPF is intended for government workers, mandatory for all the employees of the private sector to contribute to EPF, and PPF is available for anyone. All three offer great pension benefits that ensure one has enough financial means to sustain him/her after retirement.
Learn about the three main Provident Fund types—EPF, GPF, and PPF—and how they contribute to your financial security. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
