The government runs many schemes to secure the economic future of all the sectors of the country, the most important of which is the Provident Fund (PF). In common parlance, they are known as PF. Very few people know that these are of three categories. Public Provident Fund (PPF), Employees Provident Fund (EPF) and General Provident Fund (GPF). Many people find it difficult to understand the difference between these three funds. Now, after the announcement of the Unified Pension Scheme, people are confused whether there will be any change in it or not. So, let us understand these funds.
Public Pension Fund
As the name suggests, this PF is targeted at the general public. Any Indian citizen, whether an employee or an entrepreneur, can avail this. It can be opened at post offices or banks. In this, a minimum of Rs 500 and a maximum of Rs 1.5 lakh can be deposited annually. The PPF matures in 15 years and can be extended for 5 years each. Compound interest is available in this, which means the interest amount is also added to the original investment and interest is also earned on it. Currently, the government is giving an interest of 7.1%. In this regard, an exemption under Section 80C of Income Tax is also available on investments of Rs 1.5 lakh per year.
Employees’ Pension Fund
EPF is for employees of those private sector companies that have more than 20 employees. A certain portion of the employee’s salary is deposited in it, and the company also contributes the same amount. However, only 3.67% of the company’s share goes to EPF, while the remaining 8.33% is deposited in the Employees’ Pension Scheme. After retirement, the PF amount is given to employees as a lump sum, while the EPF amount is given as pension. The interest rate on EPF has been fixed at 8.25% for the financial year 2023-24, which is slightly higher than many other savings schemes.
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General Pension Fund
GPF is only for government employees. In this, accounts are opened for temporary and permanent employees who work continuously for one year in government institutions. Employees are required to contribute at least 6% of their salary to GPF, provided they are not suspended. After retirement, they receive a lump sum. But with the introduction of the new UPS pension scheme, the main disadvantage is that there is no provision like GPAF to pay contributions.
There is also a provision for assured family pension in UPS. In case of death of the employee, 60 percent pension will be immediately given to his family. Dearness allowance benefit will be available for Assured Pension, Assured Minimum Pension and Assured Family Pension. This will be as per All India Consumer Price Index for Industrial Workers. In this pension scheme, apart from gratuity, retirement will also be paid. The employee will be paid a decent payment on retirement, for this, after the employee completes every 6 months of service, 1/10th of the salary and dearness allowance will be added to the gratuity. This payment will not affect the assured pension of the employee.
