PF (Provident Fund) different types and what do they mean and what they do!
Contents News/Article Date: 3rd November 2022
Relating to which Act The Employees Provident Funds & Miscellaneous Provisions Act, 1952
Applicable to which State: All the establishments in the States with PF coverage as well as general employees as well as Government employees.
Type: News Coverage.
Pertains to Employers and employees and income taxpayers and Government employees
Relevance of this news: Karma Management Global Consulting Solutions Pvt. Ltd is in the business of Payroll, Outsourcing, and Regulatory Compliances since its inception in 2004 since then, has brought in a lot of efficiencies and technological upgradations with experts on its role, to ease the hassles of Payroll Processing, Temp Staffing On-boarding, Regulatory and Payroll compliances by providing customized solutions to all its elite clients.
Karma Global does the PF & ESI work of hundreds of clients which it has been doing so for the last 18 years and has indeed helped lakhs and lakhs of employees who have been given assistance while in regular service as well as beyond retirement.
Karma puts forth the variety of PF types and what they mean to each one of you:
Employees Provident Fund (EPF)
EPF is a provident fund scheme for salaried employees other than government employees, operated by the Employees Provident Organisation (EPFO), the Central government’s retirement fund body.
Public Provident Fund (PPF)
PPF is not a mandatory provident fund scheme, and a PPF account can be opened by an Indian resident, both salaried and non-salaried.
A person can deposit a minimum of ₹.500 and a maximum of ₹.1,50,000 in their PPF account in a financial year.
General Provident Fund (GPF)
The General Provident Fund (GPF) scheme is available only for government employees.
The GPF scheme is managed by the Department of Pension and Pensioners’ Welfare under the Ministry of Personnel, Public Grievances, and Pensions.
Subject: PF (Provident Fund) Account Types, Differences, and Details
For greater details, appended below is the complete news item
NDTV
PF (Provident Fund) Account Types, Differences, and Details
Under the PF schemes, the employees contribute a small amount of their monthly income, which turns into a retirement corpus.
Provident funds (PF) schemes are aimed at providing an opportunity for salaried employees to create a retirement corpus with regular investments.
With these investments, the employees can get a lump-sum amount at the time of retirement. The main objective behind the provident fund schemes is to provide financial security to employees after they retire from the service.
Under the PF schemes, the employees contribute a small amount of their income every month, and the total amount turns into a retirement corpus while a portion of the total savings can be availed as a pension.
There are several types of provident fund schemes, namely, employees’ provident fund (EPF), public provident fund (PPF), and general provident fund (GPF).
Employees Provident Fund (EPF)
EPF is a provident fund scheme for salaried employees other than government employees, operated by the Employees Provident Organisation (EPFO), the Central government’s retirement fund body.
Every organization or a corporate entity with more than 20 employees must provide retirement benefits to its workers per the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
According to the existing EPFO rules, an employee contributes 12 percent of the basic salary and dearness allowance, up to a maximum of ₹ 15,000, every month, and the employer contributes an equal amount (12 percent).
Out of the employer’s contribution, 8.33 percent goes to the Employee’s Pension Scheme (EPS), while the rest 3.67 percent is invested in EPF. The EPF interest rate for 2022-23 is 8.10 percent.
Employees can permanently close their EPF account after retiring and transfer it while switching jobs.
A partial withdrawal is allowed from an EPF account for reasons such as repayment of the loan, buying or constructing a house, and medical treatment of family members, among others.
Public Provident Fund (PPF)
PPF is not a mandatory provident fund scheme, and a PPF account can be opened by an Indian resident, both salaried and non-salaried.
A person can deposit a minimum of ₹ 500 and a maximum of ₹ 1,50,000 in their PPF account in a financial year.
Unlike EPF, a PPF account matures after 15 years, which can be extended further in blocks of five years. Partial withdrawal can be made every year starting from the seventh financial year of opening the PPF account.
The interest rate for PPF is decided by the Central government every quarter. The current PPF interest rate is 7.1 percent.
General Provident Fund (GPF)
The General Provident Fund (GPF) scheme is available only for government employees.
All temporary government servants who have served continuously for one year, all permanent employees, and all re-employed pensioners (other than those eligible for admission to the contributory provident fund) can open a GPF account.
One has to contribute a minimum of 6 percent of the monthly salary to the GPF account. The GPF interest rate for the October-December quarter of 2022 is 7.1 percent.
The GPF scheme is managed by the Department of Pension and Pensioners’ Welfare under the Ministry of Personnel, Public Grievances, and Pensions.