Glossary
Provident Fund(PF)
Meaning & Definition
Provident Fund (PF) is a social security savings scheme offered by the government aimed at assisting eligible employees accumulate funds for long term financial security. As per Employees’ Provident Funds system, both employer and employee make prescribed contribution in accordance with applicable wages. The accumulated amount along with interest applicable can assist employees post retirement or through eligible withdrawals.
Importance of Provident Fund (PF)
- Helps accumulate long-term savings for retirement.
- Offers a disciplined saving tool.
- Includes contributions of both employer and employee (where applicable).
- Earns interest in accordance with applicable EPF rate.
- Offers financial assistance through eligible withdrawals and advances.
- Provides social security benefits to eligible employees and family members.
Compliance Guide
- Statutory requirements regarding provident fund in respect of covered establishments are governed by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the applicable EPF Scheme. Applicable employers and employees have to adhere to prescribed requirements for registration, contribution, deposit, maintenance of records and reporting.
- The statutory contribution is usually 12% of basic wages and dearness and retaining allowances. Contribution of the employer is divided between EPF and EPS in accordance with applicable schemes.
