Voluntary Provident Fund (VPF)

What is the Voluntary Provident Fund (VPF)?

Voluntary PF, Voluntary Provident Fund, or VPF is known as an investment scheme that is part of a conventional provident fund plan. Under this plan, employees are allowed to form contributions over and above the minimum contribution set by Employee Provident Fund Organization– EPFO. VPF doesn’t include 12% of the salary that is contributed to the Employee Provident Fund.

Under VPF, An employee can contribute up to 100 percent of their Basic Salary and Dearness Allowance. Experts advise investing in VPF because it offers a rate of interest of 8.5% that’s higher than the rate of interest offered by PPF (Public Provident Fund).

The Indian Government will compensate employee and employer contributions to the employee’s EPF account for additional three months, from June to August 2020. It’s not mandatory for employees to make contributions to their VPF portfolio. Similarly, employers also are not obligated to render contributions to the scheme. The Govt. of India alone has the authority in the country to determine the interest rate of the VPF at the beginning of every financial year.

Also, See: Public Provident Fund (PPF)