Provident Fund | Meaning and Definition

What is a Provident Fund? 

Provident Fund is an acronym for Provident Fund. It is a plan that allows salaried workers to contribute during their working years and receive the advantages after their retirement. It is a government-managed pension fund plan for employees who can deposit a portion of their monthly savings to their retirement account. EPFO oversees the entire procedure (Employees Provident Fund organization). Any company with much more than Twenty workers is eligible for PF and is required to enroll with the EPFO.

The Employee Provident Fund Organization establishes all rules and regulations.

Employees and employers both contribute to the PF fund. In the name of the employee, the contributions are accumulated in the provident fund. Employer contributions are equal to 12% of the basic pay plus DA (Dearness Allowance). 

EPFO’s objectives

The EPFO’s key aims are listed below:

  •       To make clear that each worker just has one PF account.
  •       Compliance must be simple to achieve.
  •       Ensure that companies adhere to all EPFO laws and regulations regularly.
  •       To assure the reliability of digital services and to enhance their capabilities.
  •       Every member account should be easily accessible online.
  •       The time it takes to resolve a claim will be lowered from 20 to 3 days.
  •       Encouragement and promotion of compliance behavior.
  •       Provident fund Advantages

 

The following are the advantages of the PF plan: 

  •       It aids in long-term financial planning.
  •       Making a major lump-sum contribution is not required. Employees’ salaries are deducted regularly, which allows them to save a considerable amount of revenue over time.
  •       It can assist a worker in a liquidity crisis.
  •       It aids in the saving of money for retirement and the maintenance of a healthy existence.