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VPF (Voluntary Provident Fund): Features, Benefits, & Interest Rate
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All you need to know about Voluntary Provident Fund (VPF)

Financial planning is important for you to secure your family from unforeseen events. On the other hand, you need to gather more details about the saving instruments in detail that will help you in various ways. This is because different savings plans work differently in the markets. A voluntary provident fund is the wise investment option for you because it gives ways to accomplish goals in the investment process. Not only that, it enables you to ensure high protection from unwanted problems.

What is the Voluntary Provident Fund (VPF)?

Voluntary Provident Fund (VPF) is the contributions made by the employees that are over and above the minimum contribution set by the Employees’ Provident Fund Organisation (EPFO).

Things to know more about the Voluntary Provident fund

It would help if you got the meaning of VPF full form in detail before joining the plan that will help make the best decision. It is an extension of EPF, allowing you to contribute to their provident fund account voluntarily. The Indian Government supervises this scheme, excluding a 12% contribution towards the EPF fund. If you are an employee, you can contribute the full amount to your basic salary as well as DA. However, you should evaluate the interest rate of the Voluntary Provident Fund from different sources before joining a plan. Apart from that, it allows you to focus more on your financial planning, giving ways to gain more advantages.

What are the features of the Voluntary Provident Fund?

Here we listed out the 8 features of the Voluntary Provident Fund (VPF) as mentioned below:-

  1. Secure investment: The voluntary provident fund scheme is a secure investment that doesn’t involve any risks compared to other investment plans. Moreover, it allows you to improve their financial conditions to help overcome unwanted problems significantly.
  2. High Rate of Interest: The fund comes with a high rate of interest, allowing you to generate high income. At the same time, the Government of India will fix the interest rates based on inflation and other factors. Currently, the rate of interest under VPF is 8.5% per annum.
  3. Ease of Transfer: You can transfer your fund from an old company to a new company when changing a job. The transfer process is easy that will help save your time.
  4. Ease of Application: Applying for a VPF account is quite simple, and you can approach their HR manager and request to open an account with the required KYC documents.
  5. Tax Benefits: You can get tax exemption benefits under the VPF fund that will help save tax amounts to a large extent.
  6. Partial Withdrawals: The fund enables you to withdraw amounts wholly and partially depending on your needs. At the same time, a tax will be levied on amounts when you withdraw the amount before 5 years. Therefore, you should know the voluntary provident fund withdrawal rules in detail from different sources.
  7. Loan Facilities: As a subscriber, you can avail of loan facilities from this fund during emergencies subject to certain terms and conditions.
  8. Death Benefit: In case of your sudden demise, the accrued amount will be paid to your nominee or legal heir in full.

 

What are the key benefits of VPF?

  • The VPF locking period is 5 years and is ideal for long-term investments 
  • You can yield better returns due to high-interest rates 
  • VPF allows you to withdraw amounts at the time of resignation or after the retirement 
  • The account enables you to get an income tax deduction of up to Rs.1 lakh
  • You can open an account at any time of a given financial year 

 

How to enroll in the Voluntary Provident Fund (VPF)?

VPF is a subset of the Employee provident fund (EPF) for the employees, and you can open an account by requesting your finance team or HR. In addition to that, the employer must get registered with the EPO office. Finally, you should submit a VPF application form to an employer with the required KYC documents to get approval as soon as possible.

How to calculate the VPF interest rates?

The interest rates of VPF are primarily based on the opening balance of each month, which includes employee’s contribution, employer’s contribution, and VPF. Moreover, the interest rates will be credited to an EPF account at the end of a financial year. 

If you want to calculate the interest rates, you should use a voluntary provident fund calculator online tool. It allows you to get the amount of money that will accumulate in the EPF account after retirement. The tool will calculate the lump sum amount, which includes both employee contributions and the employer’s contributions. Apart from that, you should also have the accrued interest on the investment. 

The EPF calculator has a formula box where you have to enter your age, basic monthly salary, and the dearness allowance. You should enter your current EPF balance and the contribution to the EPF. The calculator will display the amount when you want to join another company.

What are the documents required for an employer for VPF enrollment?

Your employer should submit certain documents for the VPF enrollment process to contribute amounts accordingly. For example, it should enclose a comprehensive company’s profile, business registration certificate (Form 9 and Form D), Form 24, Form 49, Memorandum and articles of association, etc. 

Documents needed for VPF withdrawal

If you want to withdraw the amount from your voluntary provident fund scheme, you should furnish the following documents.

  • A cancellation cheque 
  • Bank details for crediting the amount 
  • Your details 
  • EPF’s account number 
  • Postal address 
  • Form-31

 

Rules and regulations under VPF

You should know the rules and regulations of the VPF in detail when they want to open an account. 

  • The interest rate is subject to change which can increase or decrease in a financial year.
  • You should have an EPF account to apply for the VPF scheme.
  • Partial withdrawals are available for you in the form of loans.

You should understand what is voluntary provident fund contribution before opening an account. This will help a lot to plan your future with ease. Besides that, you can overcome complications while withdrawing the amount that gives ways to experience peace of mind.

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