A non-constitutional organisation known as the Employees’ Provident Fund Organisation (EPFO) encourages employees to avoid wasting apart cash for his or her retirement. The group’s programmes cowl each home and international workers (from nations with which the EPFO has signed bilateral agreements).
Employees’ Provident Fund: EPF is the principle scheme underneath the Employees’ Provident Funds and Miscellaneous Act, 1952. The Employees’ Provident Fund Organisation (EPFO) oversees the administration of the programme. EPF is funded by 12% of the worker’s base pay and dearness allowance from each the worker and employer. When the employer retires, they obtain a lump quantity that features curiosity on each their very own and the employer’s contributions. The rate of interest on EPF deposits is presently 8.15% each year.
Public Provident Fund: PPF is among the preferred long-term financial savings and funding programmes, primarily as a result of it combines security, returns, and tax advantages.
What is the distinction between EPF and PPF?
When you stop your work, you may take the funds out of your EPF account. However, the PPF deposit can’t be withdrawn till the account reaches maturity, which takes 15 years from the deposit date.
Advantages of Employees’ Provident Fund (EPF):
- Guaranteed return
- Tax advantages
- Long-term saving scheme
- Interest earned on EPF corpus is compounded yearly
- Provides sense of economic safety
Disadvantages of Employees’ Provident Fund (EPF):
- Returns are restricted
- Early withdrawal penalties
- EPF contribution is inflexible
- EPF stops incomes curiosity after shifting from giant to small firm
- EPF doesn’t match long-term return of MFs or NPS
- Lock-in interval
Advantages of public Provident Fund (PPF):
- Government-supported saving scheme
- Offers assured income
- Flexible
- Taxes usually are not due on curiosity or the maturity quantity earned
- Partial withdrawal permitted
Disadvantages of Public Provident und (PPF):
- Interest price decrease than EPF
- Lock-in-period of 15 years
- Maximum deposit restrict mounted i.e., Rs 1.5 lakh
- Strict untimely withdrawal guidelines
- Early untimely closure not allowed
- No liquidity exists
