Voluntary Provident Fund is undeniably attractive with your boss corresponding your monthly contribution and being tax free. You enjoy a surefire return of 8.5 percent. Supposing you are aged 25 and make a good twenty grand every month and put in 12 percent (and more if you wish to) of your basic salary (excluding dearness allowance) per month, and the employer also contributes the required 12 percent, but the time you stop working, you could have a whopping savings of INR 1.38 crore. This if you continue to retain the same percentage and receives a humble hike of five percent yearly.
There is no intricate process in this. The concerned person has to submit a paper citing how much of his monthly earnings he/ she wishes to invest towards the VPF. The only thing accumulating or decreasing the contribution practically can be performed once annually. You can collect a Voluntary Provident Fund Form from your employer and submit it duly filled. Let this be an additional savings for life a financially-smooth life after retirement.
There is no limit for you to add to your company’s contribution to the EPF too. But if your remuneration exceeds INR 6500, then you can limit employer's contribution for only salary up to that amount. Else the employers themselves must put in that added sum at their discretion. Saving for your golden years is the last objective on the financial path that a salaried worker anticipates. And this where the Employee Provident Fund becomes significant.
Your entry in the VPF account book under your present boss, and you are entitled to draw the sum from your account in two months you resign from your current job. Rather than extracting the sum, you may also transfer the same to your new PF account started under the new organization. And the entire procedure will not take longer than a month. Of course the maximum contribution from your side should not exceed more than 100 percent of your basic salary.
The highest interest rate (up to 9 percent) makes it quite a lucrative scheme. This is why most workers do not bother closing down their VPF accounts even after job change or resignation. Staffs also get a huge tax deduction (as per the Section 88 of the Indian Income Tax Act) on their whole input to the fund. So we have ample scope to smartly plan for life after age 60.