Voluntary PF, or Voluntary Provident Fund, refers to an investment scheme that is a part of a conventional provident fund plan. Employees, under this scheme, are enabled to offer contributions over and beyond the contribution threshold established by the Employee Provident Fund Organization (EPFO). It does not entail 12 percent of the salary that is contributed to the Employee Provident Fund (EPF). An employee can make contributions up to 100 percent of their Basic Salary and Dearness Allowance. It is recommended by the investment experts to invest in Voluntary Provident Fund (VPF) as it proposes an 8.5% rate of interest that is greater than the interest provided by the Public Provident Fund (PPF).
The Indian Government will compensate the employee and employer contribution to the employee’s EPF account for additional three months, from June to August 2020. This is advantageous for organizations that have up to 100 workers and where at least 90 percent of those workers get a salary of less than Rs. 15,000/ month. For non-government organizations, the contributions have been lowered to 10 percent, which was 12 percent earlier. It is not mandatory for employees to make contributions to their VPF portfolio. Similarly, employers are also not obligated to render contributions to the scheme. As soon as the contributions have opted in VPF (Voluntary Provident Fund), they cannot be terminated or desisted before the threshold tenure of 5 years. The Government of India alone has the authority in the country to determine the interest rate of the Voluntary Retirement Plan at the beginning of every financial year.