In India, almost all the salaried employees do not get to enjoy a certain chunk of their salary, which is deducted as EPF (Employee Provident Fund). The EPF, which is commonly known by its acronym PF is a retirement savings scheme introduced by the government of India for the benefit of all the salaried employees. The EPF is governed by the EPFO (Employee’s Provident Fund Organization).

One of the main reasons why the provident fund scheme was introduced was to encourage the employees develop the habit of monthly savings and provide them a regular income post-retirement. PF is a voluntary contribution by the employee towards their retirement fund.

In India, the employees contribute 12% of their salary towards the PF and an equal percentage is contributed by the employer. You can withdraw the amount accumulated in your PF account when you retire or in the event when you are unable to work.

Why is PF useful?

The amount you contribute towards the PF every month is pooled together and invested by a trust and it generates an interest of about 8% to 12%, as determined by the government of India. As per the figures on the official website of the EPF, the current annual interest rate of PF is 8.5%.

As you continue to remain employed and contribute towards the PF, the amount in your PF account continues to grow and gain interest. By the time you attain the retirement age, you pool a significant amount, which can be used for the post-retirement life.

For as long as you are employed, the EPF is applicable and the amount would be deducted from your salary. In case you change jobs, it is important that you update the EPF information with the new employer and provide them the EPF number so that they can continue contribute towards the PF account.

Types of PF in India

In India, apart from the EPF, there are different types of provident fund schemes, which are listed below:

SPF – Statutory Provident Fund

SPF is meant only for the workers employed in a government or semi-government employees like the Railways, educational institutions and government run institutions.

UPF – Unrecognized Provident Fund

It is the PF scheme that is not approved by the commissioner of income tax or the PF commissioner

PPF – Public Provident Fund

Anyone who is employed or not may contribute towards the PPF scheme. The salaried employees have the option to contribute towards PPF apart from their regular EPF scheme. It is also a long-term savings scheme that helps people to save a certain amount of money every month for later use. You can open a PPF scheme in any post office or in banks like ICICI, SBI and HDFC. The minimum contribution under this scheme is Rs. 500 and the maximum amount is Rs. 1, 50,000 per annum and the duration of the scheme is 15 years.

Learn more about your Pension Plans here.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

Trending Articles

Article Links


Employee Pension Scheme (EPS)

Pradhan Mantri Pension Plan

Types of Pension Plans

What is National Pension Scheme (NPS)

Latest Articles


PPF Withdrawl: When & How to Withdraw PPF

Read More
Posted on 19 February 2020

How to Calculate PPF Returns

Read More
Posted on 08 February 2020

How to open an Employee Provident Fund account?

Read More
Posted on 05 February 2020