Voluntary Provident Fund (VPF)

What is Vol­un­tary Prov­i­dent Fund (VPF)?

Vol­un­tary Prov­i­dent Fund (VPF) is vol­un­tary con­tri­bu­tions to the Employee Prov­i­dent Fund account by the employee. It is directly linked to EPF account. The only basic dif­fer­ence in VPF and EPF is, in the for­mer one employee does it vol­un­tar­ily whereas in EPF con­tri­bu­tion is mandatory.

Will my employer con­tribute to VPF

If you have decided to increase con­tri­bu­tion to EPF (through VPF), it does not mean that the employer con­tri­bu­tion will also increase by the same per­cent­age. Ide­ally no employer should con­tribute to VPF as it is def­i­nitely a higher cost for the com­pany. How­ever it is always bet­ter to cross ver­ify the company’s HR poli­cies on VPF. Check with the human resource (HR) per­son­nel of your com­pany regard­ing the employer con­tri­bu­tion to VPF.

VPF – Inter­est rate

VPF inter­est rate is the same as EPF inter­est rate.

VPF – Tax impact

Amount invested in a VPF account qual­i­fies under Sec­tion 80C of the income tax act.

VPF – Should I invest?

If you are a risk averse investor, Vol­un­tary Prov­i­dent Fund (VPF) is a very good invest­ment option.

Related posts:

1. Employee Prov­i­dent Fund (EPF)
2. Should I with­draw prov­i­dent fund amount?
3. EPF vs PPF – Which is a bet­ter option
4. EPF at 9.5% — Should I invest
5. VPF vs PPF – Who’s better