Writer | Posted on
Employees provident fund is a part of provident fund. PF is a wide subject that includes EPF in it. It is an employees' retirement scheme managed by the government. The government employees needs to save a portion of their salary in the form of pension fund. Every month, these savings accumulate. The employees can withdraw the money at the end of your employment or whenever you take retirement.
If you want to increase your retirement corpus, nothing can be better than the employees' provident fund. Because it consists of higher sum of money.
Image Source: GoogleBut the differentiation can be made between EPF and PPF:
PPF is a voluntary investment than every individual can do. These are the services that post offices and banks offers. But in case of EPF, a portion of your salary gets deducted or kept aside. The Employees Provident Fund Organization is responsible for providing the services.
Image Source: GoogleIn case of EPF, the government fixes the interest rates. So historical EPF interest rates:
2012-13: 8.5%
2013-2015: 8.75%
2015-2016: 8.8%
2016-2017: 8.65%
2017-2018: 8.55%
The interest rates on PPF changes every quarter. Interest rate of 7.6% was charged on the for the quarter ended June 2018.
In case of opening PPF account, you need to be an Indian resident. However, it doesn't matter whether salaried or non-salaried individual. PPF is not allowed for any Hindu Undivided Family. The tenure of PPF is 15 years with an extension of 5 years.
In case of EPF, the deduction of individual salaries is compulsory. The company need to make the 12% deduction from the monthly salary of more than 20 employees. The employer also contributes 8.33% in the Employees' Pension Scheme. But in total, your employer pays 12%. And the remaining is left in the name of EPF.
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CONTENT WRITER | Posted on
An employee's provident fund is a type of pension account that can be used to provide for employees, while a provident fund solely for distribution is a type of retirement plan. As defined by the Employee Provident Fund Act, 1961, India's central act concerning employee benefits, an employer can contribute a maximum of 10% of his wage bill per annum towards an employee's provident fund. An employer may provide more than 10% if he exercises his discretion to do so.
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