VPF: VPF or Voluntary Provident Fund is a non-compulsory investment made by salaried employees in addition to EPF or Employee Provident Fund. Its advantage is that it is a government-backed savings scheme with low risk and high returns. The full form of VPF is Voluntary Provident Fund.

In India, a portion of every salaried person’s income is allocated to the Employees’ Provident Fund (EPF) every month. This mandatory contribution is designed to ensure financial stability for employees during their retirement. The PF account is funded through contributions from both the employee and the employer. Generally, it comprises 12 per cent of the employee’s basic salary and an equal 12 per cent from the employer.

The deposited PF funds earn interest over time. Serving as a valuable financial security for long-term savings, EPF plays a vital role in the retirement planning of many salaried individuals in India. Yet, it is possible to grow this PF amount four times with minimal effort.

There is no minimum amount or minimum annual investment for VPF.

You can contribute up to 100% of your basic salary to EPF and VPF.

What is VPF?

If you want to increase the money in your PF fund, then today we will tell you a way through this news. VPF can be called a kind of extension of EPF, in which employees can voluntarily contribute more money to their EPF account. Tax and withdrawal rules for VPF are similar to EPF. VPF is beneficial for those who want to increase their retirement savings by increasing the money deposited in EPF.

Investing in VPF

Though the entire process may seem cumbersome, transferring your money to a Voluntary Provident Fund (VPF) account can help you earn more interest in the long run.

For those who don’t know, VPF is an extension of the EPF scheme in India . Unlike the mandatory EPF contribution for both employers and employees, VPF contribution is completely optional. This means that employees have the flexibility to contribute an additional amount over and above the 12 per cent mandated by EPF.

VPF acts as a voluntary savings scheme for Indian salaried individuals, enabling employees to contribute additional money to their PF accounts beyond the mandatory EPF contribution.

VPF contributions are subject to a lock-in period of five years from the date of contribution, just like EPF. However, exceptions exist for special circumstances such as retirement, medical emergencies or housing needs. It is important to note that unlike EPF, employers are not required to contribute to their employees’ VPF accounts.

How much can you save?

Compound interest calculation shows that a voluntary contribution of Rs 2.5 lakh/year (Rs 20,833 per month) to VPF will create a corpus of around Rs 3 crore (assuming 8 per cent interest) in 30 years.

In 25 years, the total value of the PF fund will be around Rs 2 crore. In 20 years, the total accumulated fund will be around Rs 1.2 crore.

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