VPF vs GPF: Whether you’re in a government job or working in the private sector, a question must be coming to your mind: Which is better, VPF or GPF ( VPF vs. GPF Comparison )? Both are provident funds, but their rules, interest rates, and investor categories differ. Let’s understand the differences, interest rates, and return comparisons over 10-15 years.
What is VPF?
VPF, or Voluntary Provident Fund, is for private sector employees. It allows them to make additional contributions to their Employee Provident Fund (EPF) account. Typically, employees contribute up to 12% of their contribution to EPF, but they can voluntarily contribute more to VPF. VPF earns the same interest rate as EPF, currently around 8.25%. This rate is set by the government and is slightly higher than GPF.
What is GPF?
The General Provident Fund (GPF) is exclusively for government employees. Employees contribute a portion of their salary every month. This amount, along with interest, is received upon retirement. The government has complete control over the GPF, and deposits are considered safe. The interest rate on GPF for the financial year 2025-26 is 7.1% per annum. This rate is set by the government every three months, but has remained roughly the same for the past several years.
Who pays more interest?
Of the two, VPF offers an interest rate of 8.25%, while GPF offers a 7.1% interest rate. This means VPF is slightly more beneficial in terms of interest. A GPF deposit of Rs 12,00,000 will occur over 10 years. With 7.1% interest, this amount will grow to Rs 17.2 lakh upon maturity. This means you will benefit by a total of Rs 5,20,000.
A 12 lakh rupee deposit in VPF over 10 years will yield you 1880,000 rupees at maturity. This means you’ll benefit 680,000 rupees. This is 160,000 rupees more than the GPF amount. If you deposit this amount in GPF for 15 years, you will receive Rs 31,60,000, while in VPF you will receive Rs 35,80,000. Simply put, VPF offers higher returns than GPF.
Which is better for investment?
If you’re a government employee, GPF is already mandatory and secure. However, if you’re in the private sector and looking for a long-term, tax-free, secure investment, VPF is the best option. Both offer secure returns, but VPF offers a slight advantage in terms of interest rates and tax benefits.
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