Provident Fund Purpose

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Retirement Benefits Plans (Funds) are rich financial resources of the companies accumulated over the period of time to honor retirement liabilities of the employees of the companies.

 

When you join any provident fund it means that you automatically make regular, mandatory, tax-qualified, defined contributions that accumulate till you retire. It is important to note that 12% of the basic pay of a salaried employee (in addition to dearness allowance and cash value of food allowances, if any) is deducted from his or her remuneration on a monthly basis as contribution towards an EPF account. However, from the employer’s contribution, 8.33% is deposited in the Employee Pension Scheme (EPS) while only 3.67% is deposited in the EPF account. The current rate of interest (for financial year 2015-16) for an EPF account is 8.7% p.a. The rate of interest is subject to change every year, as announced every year by EPFO