VPF or Voluntary Provident Fund: Special benefits for employees

Saving for retirement is the last goal on the financial road that a salaried employee expects. That’s where Employee Provident Fund becomes important. Employee Provident Fund sounds attractive with your employer matching your contribution and a tax free guaranteed return of 8.5%. Assuming you are 25 years and earn 20000 per month, if you contribute 12% of your basic plus dearness allowance every month, and the employer matches with his contribution, by the time you retire, you would be able to save 1.38 crore (assuming that the interest rates remain the same 8.5% and you get a modest salary hike of 5% every year).

Your entry in the EPF book of accounts is under your current employer and you are eligible to take the amount from your EPF account two months after you quit the job. Instead of withdrawing the amount, you can also transfer the amount to your new EPF account created under your new employer. The process of transferring your PF amount will ideally take 30 days.

Keeping the advantages of EPF in mind the Government of India has introduced VPF – Voluntary Provident Fund contribution.

Voluntary Provident Fund (VPF): VPF is a safe option wherein you can contribute more than the PF ceiling of 12% that has been mandated by the government. This additional amount enjoys all the benefits of PF except that the employer is not liable to contribute any extra amount apart from 12%. An added advantage is that the interest rate is equal to the interest rate of PF and the withdrawal is tax free. Please note that the maximum contribution towards VPF is 100% of your Basic. The highest rate of interest (close to 9%) makes it a very attractive saving scheme. Because of these advantages many  employees chose not to close their PF account even after getting employment else where other than India. Employees also get a major tax break on their entire contribution to the fund (tax rebate under section 88 ) up to a ceiling of Rs. 70,000/-

Other benefits include –  employees can take a loan against the amount accumulated in the fund. However availing of loans depend on permissible rules and circumstances and they can access money for reasons such as housing, marriage, children’s education etc. An employee can withdraw the VPF amount in between of his/her service and need not necessarily wait till the end of employment and there is an option of break in the contribution in certain months when the expenses are expected to be higher.

So, let us use this opportunity and opt for Voluntary Provident Fund along with EPF contribution and enjoy the benefits to the maximum!

40 thoughts on “VPF or Voluntary Provident Fund: Special benefits for employees

  1. Sivasankari

    I am working in Engineering college as an office incharge. Kindly give the details about deduction of VPF is for % basic or random basic

  2. Mahendra SIngh

    Its indeed what i was searching for

    Actually salary figures of mine are close to what you have infered. But the problem is that when i ask my account manager here for VPF provisions he says as per the new PFguidlines i can not opt for VPF? so, is he true or just making me fool? can i forcefully ask for VPF againsty his insincere nod?

    Your reply is highly waited, if you would wright me on mahendrasingh.maderna@alembic.co.in


    Let me know the Payment mode for the amount paid against Volunatry -PF as i want to Continue the savings . I used to pay the Amount by deducting from Salary in the Previous Company as there was an option to mpay . But There is no option for paying in the Present Company

  4. ambika

    Let me know whether an exempted employee from P.F is eligible to deduct V.P.F from his salary. if yes, what is the procedure.

  5. Jagan

    Hi..my company doesnt have provision to automatically contribute to VPF even if I give instruction to them to deduct 12% of basic towards VPF…how can I still contribute towards VPF, i.e., add VPF amount to the existing PF account number of mine?

  6. Ajitabh

    can you please advise how to withdraw VPF i have sizable amount accumulated in my VPF account and also after withdrawing it can i again opt in pls let me know the entire procedure

  7. Karthikeyan

    sir, i am by mistakenly typed the 100% contribustion instead of 10%. wheather can i change the percentage to 10%. is possible.

  8. DCIBlog_Live

    Please find the reply for all your comments:

    Voluntary Provident Fund (VPF)
    VPF is applicable for employees who are covered under the Employee’s Provident Fund.

    How can employee opt for VPF?
    * Any employee can opt for VPF by mentioning the details like what is the percentage he/she wants to opt on his/her Basic+DA+Food Allowance and give the same in writing to the employer.
    After that the mentioned percentage of amount on Basic+DA+Food Allowance will be contributed towards VPF.
    * His/Her contribution will continue till he/she will be in service.
    *From the Employer Side: Employer can add this VPF amount also along with EPF amount under contribution recovered from Employee while mentioning Form – 12A or can have two separate columns one for EPF and other for VPF. The same thing in PF Challan can be mentioned separate box given under Employee’s Provident Fund which says VPF.
    * In yearly returns we can mention under a column called “RATE OF HIGHER VOLUNTARY CONTIRBUTION (If Any)” in Form 6A and same kind of column can be added in Form 3A also this will help to have more clarity.
    * When it comes to mentioning in the Withdrawal form i.e particularly in Form-19 we need to mention the total amount of employee contribution which would include both EPF and VPF.

    Note: There is no limit on the percentage that one can choose to opt. And Admin/EDLI Charges are applicable only on the total wages and thus it will not make employer to pay extra charges.

  9. Ishita

    VPF vs PPF – Which is bet­ter? Many of us have this ques­tion and want to know which is bet­ter as an invest­ment option, VPF (Vol­un­tary Prov­i­dent Fund) or Pub­lic Prov­i­dent Fund. As the name sug­gests both the prod­ucts – VPF and PPF are prov­i­dent fund schemes. Let’s under­stand the two schemes in detail.

  10. krishna kumari

    if one person is changing his job from one company to another company what happens to vpf and is there any locking period and what is the procedure to close it

  11. Balaji

    I am paying 24% of my salary to VPF apart from PF which is 12%, where as my company is considering only 24%(PF+VPF) for IT purpose. Is there is any mandatory rule that PF+VPF max 24% is allowed. I saw in net that 100% VPF can be considered for IT. Please reply

  12. Neeraj

    am i eligible for loan on my PF? As its been 3 and a half a yrs with a salary of 39000 per month. i am looking for a VPF from next month. i need a loan for 2 lakhs somewhere around October, 2012. pls suggest. do i need to apply for VPF or my PF will help me out.

  13. Atma ram mishra

    I think vpf is a good and safe opetion for investment.
    But i want to know two more question,s
    1. How do i can make it,s possible ?
    2. Can i withdrawn the vpf amt. In medway of my continued service in what percentage of my vpf.?
    Pls. Guide me . .

  14. Sai

    Hello sir,

    Can you eloborate little on this below pooint?

    Employees also get a major tax break on their entire contribution to the fund (tax rebate under section 88 ) up to a ceiling of Rs. 70,000/-

    My PF + VPF is aroun 15k per month. I am not saving on LIC etc.. is that good choice or bad choice?


  15. Raman

    Hello sir,

    I just want to know that How can I check VPF. is that associated with EPF Account. or do we have other link to check it.

  16. preeti

    How can I withdraw my VPF money. Please let me know the process. I am not able to find any option to check my VPF statement and not even any option to withdraw money. Please guide me.

  17. VEDA

    Limitations of Voluntary Provident Fund

    Maturity: As we know that the basic objective behind Provident Fund is to build corpus for retirement therefore you can withdraw EPF only at the time of retirement. For private firm employees there is an option to withdraw at the time of leaving job if there is a gap of 2 or more than 2 months between two jobs. Personally i never suggest withdrawal from EPF account. It should be saved for retirement. One time premature withdrawal is allowed from EPF but only for marriage of a child, property purchase or medical emergency.

  18. mahesh

    let me know , some details about VPF , actually i don’t have vpf account just pf account , after leaving job can’i maintain vpf account with out job it’s possible just tell me bout this , in case i resign my job, i will contuse vpf account

  19. Laxman Kshirsagar

    I am having EPF and VPF both since 2003 onwards. I am depositing 12 % for each every year. I had withdrawn some amount for payment for my house which is under construction. Now I wish to take out 50 % of the total contribution of EPF and VPF. As per calculations, I am having 6.60 lacs in PF account. Now I wish to take out 3.00 lacs for my daughter’s education, but it is denied. I am having service of 13 years now and 50 % of total PF amount is permissible, as per PF rules I hope. I am contributing VPF for the similar reasons that in case of such requirements, I can withdraw. Which act I should refer to for such VPF withdrawal?

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