- About Coverfox
Voluntary Provident Fund is a voluntary contribution made by the employee towards Employee Provident Account. Here’s all you need to know about VPF scheme and the reasons that make it a good investment option.
If you are a salaried individual and invest in Public Provident Fund (PPF), you may be missing on something whose returns beat that of PPF and provides similar benefits. Provident fund (PF) is a type of retirement scheme where both employee and employer contribute towards the PF account of the employee.
Voluntary Provident Fund (VPF) is a variation of regular PF scheme under which you can contribute a maximum of 100% of the basic salary plus DA (Dearness allowance) every month. This contribution should ideally be above the regular PF limit of 12%. However, you are not bound to contribute any specific amount towards your VPF account. Your 12% PF contribution is added to the fund account along with the voluntary contribution amount.
All members of EPFO (Employee Provident Fund Organisation) who contribute actively towards EPF every month, are eligible for VPF. A member cannot contribute to the VPF scheme when he/she is out of the job.
You can opt out the scheme only after completion of five years and when you switch your job, you can transfer your PF account. However, the VPF remains active in the new organisation as well unless you withdraw from the scheme after five years.
Following are some of the key benefits offered by the VPF scheme.
There may be a number of reasons behind making a withdrawal from your VPF account. Withdrawals can be made by filing Form 31 and writing a request letter. You can get Form 31 from finance or HR team of your organisation, or it can be downloaded from EFPO official website. Also, you need to submit relevant documents including your basic information, EPF account number, postal address and bank account details.
It is wise to calculate the returns and maturity value beforehand when investing in the long-term saving scheme. You can use an online calculator to arrive at the interest and maturity amount and make an informed decision about investing money. You can consider the factors given below to calculate VPF value.
Simply put, Voluntary Provident Fund scheme is an extended version of Employee provident Scheme. The scheme is available only for salaried people receiving a monthly income in the form of salary. Needless to say, VPF provides employees with unmatched return rates and tax efficiency. It is not only a safe investment option, but also offers salaried class a medium-term saving option which can be liquidated smoothly in case of financial emergencies. The unmatched benefits offered by VPF has made it a popular choice in India amongst the employed class.
Recommended Read: Right Way to Invest in the National Pension Scheme