There are three major provident fund accounts — namely Employees’ Provident Fund or EPF, General Provident Fund or GPF and Public Provident Fund or PPF — available in the country. EPF is a compulsory retirement saving instrument that is deducted from the salary of individuals. GPF is a provident fund account which is available only for government employees. While, PPF account is a savings scheme, offered by both banks and post offices, which also offers income tax benefits. Interest rates on these provident fund accounts are revised by the government from time to time.
Here are key things to know about EPF and GPF accounts:
Employees’ Provident Fund
Companies employing more than 20 people have to compulsorily make contributions towards the EPF. Both the employee and the employer make equal contributions towards EPF. Last month, the Ministry of Finance approved 8.65 per cent rate of interest on EPF for 2018-19.
EPF account can be closed while quitting job permanently. It can also be transferred while changing companies till retirement. Partial withdrawal is allowed in case of EPF account under certain circumstances such as purchase/construction of house, repayment of loan, marriage of self/daughter/son/brother or for medical treatment of family members etc.
A government employee becomes a member of GPF by contributing a certain percentage of his/her salary to the account. As per GPF rules, all temporary government servants after a continuous service of one year, all re-employed pensioners (other than those eligible for admission to the contributory provident fund) and all permanent government servants are eligible to subscribe to GPF. Currently, the rate of interest on GPF is 8 per cent.
A subscriber can subscribe monthly to GPF except during the period when he/she is under suspension. Subscriptions to the general provident fund are stopped three months prior to the date of superannuation. On retirement of a subscriber, instructions are issued for immediate payment of the final balance on retirement.