“Voluntary Provident Fund”

Explain the Purpose of Voluntary Provident Fund?

Voluntary Provident Fund (VPF) is a benefit plan offered by employers in India in which employees can make voluntary contributions to their retirement savings. It is a retirement savings vehicle which enables regular and systematic savings for employees.

The VPF scheme is designed to provide financial security and independence to employees in order to cope with various expenses during retirement. It is offered under the Employee Provident Fund Organisation (EPFO) scheme and has a higher return rate than traditional investments and savings plans. The funds saved in VPF are exempt from tax, making it a very attractive option for employees wanting to save for their future.

Benefits and Contributions of Voluntary Provident Fund?

VPF has many benefits for an employee, such as:

• Tax Benefits
• Higher Return Rate
• Easy Access
• Regular Savings
• Employer Contribution

Features and Eligibility of Voluntary Provident Fund?

The features of VPF are as follows:

• Maturity: VPF funds can be withdrawn after 58 years of age or upon retirement, whichever is earlier.
• Interest Rate: Interest is paid at the same rate as the EPF, currently 8.5%-12%
• Loans: Loans can be taken against VPF balance.
• Flexibility: Employees can choose how much they wish to contribute to VPF, and can change or discontinue their contributions any time they wish.

FAQs

What is voluntary provident fund?

Voluntary Provident Fund (VPF) is a retirement savings plan offered by employers in India, allowing employees to make voluntary contributions to their retirement savings over and above the mandatory employer contribution required under the EPF scheme. It is designed to provide financial security to employees in their retirement by building up a lump sum through regular and systematic savings.

What is the benefit of voluntary provident fund?

The primary benefit of voluntary provident fund is that it allows employees to save for their retirement through regular and systematic contributions. VPF funds are exempt from tax, making it a very attractive savings option. Additionally, it has a higher return rate than other traditional investments or savings plans.

Who is eligible to participate in a voluntary provident fund scheme?

In order to participate in a voluntary provident fund scheme, employees must meet the following eligibility criteria:

• Employees must be at least 18 years old.
• Employees must be covered under the EPF scheme.
• Employees must be a salaried individual, earning a salary of over Rs.15,000 per month.

Employees must seek the permission of their employer before contributing to VPF.