What is Provident Fund (PF)?
As compulsory, government-managed retirement savings scheme, Provident Fund enables employees to contribute a part of their savings each month towards their pension fund. Over time, this amount gets accrued and can be accessed as a lump sum amount, at the end of their employment or at retirement. The Provident Fund money is a huge amount that helps you grow your retirement corpus.
There are mainly three different types of PFs, which include the following:
- The General Provident Fund is a type of PF which is maintained by governmental bodies, including local authorities, the Railways and other such bodies. Thus, these types of PFs are mainly defined by the government bodies.
- The Recognized Provident Fund is the one which applies to all privately-owned organizations that contain more than 20 employees. Moreover, holding a rightful claim to the PF associated with your organization, you will be given a UAN or Universal Account Number. This enables you to transfer your PF funds from one employer to another whenever you move from one occupation to another.
- The Public Provident Fund is defined by the voluntary nature of investment on the part of the employee. The PPF is also associated with a minimum deposit of INR 50 and a maximum amount of Rs. 1.5 lakhs. This PF also comes with a pre-determined maturity period of 15 years, only after which any form of withdrawal can be done from the account.
While Provident Funds are low-risk investment avenues that can help you grow your money easily, it is important to invest the PF funds in smarter investment avenues that enable you to grow your funds furthermore. Bajaj Finance Fixed Deposit is a preferred investment avenue for setting aside your funds, to multiply them.