What is Provident Fund?, Types, Interest and How to claim?

Provident Fund or PF is another name of the pension fund. This is a small cut from your salary every month for which you get interest is decided by EPFO. This amount can be withdrawn after the maturity age. The maturity age of provident funds is when you are retired. The provident fund can be withdrawn easily online via Universal Account Number for Employees covered by EPFO. This UAN id is a 12-digit number provided to every member of the provident fund by EPFO.

provident fund

Types of Provident Fund

There are three types of Provident Funds for the member of EPFO to choose from-

  • Employer Provident Fund or Provident Fund (EPF)
  • Employee Provident Fund (VPF)
  • Public Provident Fund (PPF)

Employer Provident Fund or Provident Fund (EPF)– Employers with 20 or more Employees comes under this scheme run by the Government. Usually, 12% of the employee salary is used as a base amount to contribute for the retirement by the Employer.

Employee Provident Fund (VPF) – This scheme from Government makes an equal contribution from the Employees of the organization towards the PF scheme for their retirement. This is also known as a Voluntary Employee Fund (VPF). Usually, 12% is contributed out of your salary but this can be more depending on your requirements.

Public Provident Fund (PPF) – This is a public account just like a savings account opened for the long-term investment. Anyone can opt for this scheme. This scheme is not maintained on your payslip. This is just a personal choice to save for the retirement. Checkout the return in Public Provident Fund with PPF Calculator.

Interest on PF

Provident Fund is deducted every month from your salary, while the interest is paid on a yearly bases. At the beginning of the year, you have an Opening Balance which is the total amount accumulated till that point and interest will be paid on this amount. The current Rate of Interest given by the EPFO is 8.55% p.a. 

Benefit of PF

  • A retirement pension plan to remove any dependency
  • Tax benefit
  • Insurance Benefit
  • special occasion money raiser- like marriages, hospitalization etc

How to withdraw your PF?

First of all, you have to link your UAN account to your Aadhar card and mobile phone number.
Step 1– Log on to the UAN portal and enter your details.
Step 2-Check whether the KYC details seeded are correct and verified or not.
Step 3– Select the claim you require out of the three

  • Full PF Settlement
  • PF Part withdrawal (loan/advance)
  • EPS withdrawal.

Step 4– Verify the online PF claim using One Time Password (OTP) that you will receive on your mobile number linked with your UAN. EPFO will obtain your KYC i.e. Aadhaar details from UIDAI and your online PF claim will be processed and your bank account will be credited with the amount of the claim.

FAQ’s on PF

When can we withdraw money from PPF?

PPF Withdrawal Rules 2017, one can withdraw the full amount only after the maturity period of 15 years. But in any case of emergency, you can withdraw some amount from the 7th financial year onwards.

How many days will it take for PF withdrawal?

On average 20 days to process your request.

Do I get tax benefits in PF?

Yes, PF schemes are also availed tax-deductible under Section 80C like LIC insurance plans.

Can I withdraw my PF after 5 years?

Yes, EPF withdrawal is taxable for withdrawals made before rendering 5 years of continuous service.

Do I have to work at the same place for the 5 years?

No, you can change the organization during these 5 years.

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