What is Provident Fund (PF)?

Employees' Provident Fund (EPF) is a retirement benefit program for all the salaried persons, especially belonging to the private/unorganised sector. The scheme is managed by the Employees’ Provident Fund Organisation (EPFO). EPF is also known as is the Provident Fund (PF). It is an investment plan that is mandatory for every job employee. It is a kind of savings scheme, where the employee contributes a specified proportion of his salary and an equal contribution is made by his employer, to form a retirement fund for the employee.

On retirement, the employee receives a lump sum amount, including self and employer’s contribution, along with interest on both. The minimum contribution to be made by both the employee and the employer is 12% of salary + dearness allowance per month. In the case of organisations with less than 20 employees, this limit is 10% of salary + dearness allowance. EPF is mandatory for all employees whether they are government employees or non-government employees. As per rules, a company with more than 20 employees is required to be registered in the Employees’ Provident Fund Organisation (EPFO). Those shareholders of PF who will continue to contribute for 20 years or more will receive an additional amount or bonus of Rs. 50,000 at the time of retirement.

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