VPF- Every salaried person known about EPFO, but today we are going to give you information about VPF. As per many experts, this VPF or Voluntary Provident Fund is more profitable for anyone. A good investment option is the one that gives you the highest returns at the lowest risk. If you are a salaried person and want to create a big fund to live a comfortable life after your retirement, then Voluntary Provident Fund can be a wise choice for you.

VPF is actually an extension of Employee Provident Fund. In this, the employee can contribute up to 100% of his basic salary + DA if he wants. However, unlike PF, there is no contribution from the employer in this. You also get the benefit of tax exemption on VPF investment.

How different is VPF from EPF?

Only 12% of the basic salary can be contributed to EPF, but there is no investment limit in VPF. You can keep your in-hand salary low and invest the rest of the amount in VPF. VPF is a government-backed scheme, so it is absolutely safe (risk-free). Its interest rate is decided by the government in every financial year. Currently, VPF gives 8% or more interest, which is more than bank FD.

Who can open this account?

Only employed people are eligible to open VPF. No separate account is opened for VPF. For this, you will have to contact your company’s HR or finance team. You will have to request for contribution to VPF. As soon as the process is completed, VPF will be linked to your EPF account. However, under VPF, there is no restriction on the employer to contribute to EPF as much as the employee.

You can make partial withdrawal only after 5 years of service.

In VPF account, you also get the facility of partial withdrawal in case of emergency. To withdraw money from the account, it is necessary for the account holder to work for 5 years. If the transaction is done in a tenure less than this, then tax has to be paid. The entire amount of VPF can be withdrawn only on retirement.

You get a loan

If you change your job, then like EPF, you can easily transfer this account. You can also get a loan on VPF account for children’s education, home repair or children’s marriage etc.