PPF, EPF, GPF Policies: Know Their Differences

PPF EPF GPF Policies: An investment fund called the Provident Fund was voluntarily established by both employers. And employees act as long-term savings for a person’s retirement. Employers use a variety of provident funds, including the Employees’ Provident Fund (EPF), and Public Provident Fund (PPF). And General Provident Fund, to secure retirement benefits for their workers (GPF).

The differences and advantages of each provident fund are listed below…

1. Employee Provident Fund (EPF): Employees of an organization receive EPF benefits. For employees with a basic income of up to Rs 15,000 per month receive retirement benefits. Private sector enterprises with more than 20 employees must embrace EPF. This is an optional perk for workers making a higher base wage.

Employers contribute 12% of the employee’s base wage, and both parties match that amount. An employee has the option to contribute more than 12% of his salary.

Benefits of EPF

• Regular Pension under Employees Pension Scheme (EPS)
• Benefits provided by Employees Deposit Linked Insurance (EDLI)
• 8.33% of the 12% employer payment goes to EPS, the remaining 12% goes to EDLI, and the remaining 1% goes to EPF.
• After consulting with the government, the Employees’ Provident Fund Organization (EPFO) releases the interest rate. The rate is higher when compared to the other two provident funds.
• Taxes are not applied to the entire matching contribution made by the employer, up to 12% of the basic (Basic + DA) salary.

2. Public Provident Fund (PPF): Everyone, including those who are in the military, business owners, professionals, or self-employed, can utilize this fund, as the name implies. Anyone having a PAN is qualified to open a PPF account on behalf of themselves and their minor children, and they are permitted to deposit up to Rs 1.5 lakh across all accounts they open using their PAN within a given fiscal year. The PPF account has a 15-year maturity period, which can be continuously extended for blocks of 5 years.

Benefits of PPF

• The PPF rate is announced by the government every three months, and it is often kept higher than the current fixed deposit rates.
• The account holder has two options: extend the account for an additional five years with or without contributions, or withdraw the full balance in one lump sum at maturity.
• A PPF account holder may borrow against the deposit from the third to the sixth year, and after the sixth year has passed, partial withdrawals are allowed.

3. General Provident Fund(GPF): GPF is available to government workers who began their employment with the government on or before December 31, 2003, and who are receiving pension payments under the Old Pension Scheme (OPS) to increase their retirement corpus. If eligible, government workers can contribute up to 100% of their salaries, with a minimum of 6%.

Only employees are permitted to make contributions to GPF, just like PPF, however unlike PPF, GPF is closed to the general public, and the annual investment cap is fixed at Rs 5 lakh.

Benefits of GPF

• The interest rate offered is higher than the current FD rates, and investments in GPF are safe.
• The funds deposited in the GPF can be retrieved as a lump amount at retirement. For particular needs, partial withdrawal solutions are offered.

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