VPF vs PPF: In the pursuit of securing a comfortable retirement, individuals often seek avenues that offer both stability and growth for their savings. One such option gaining traction among employees is the Voluntary Provident Fund (VPF), an extension of the Employees’ Provident Fund (EPF) with enticing benefits for long-term financial planning.
VPF presents itself as an attractive investment avenue primarily due to its robust features and promising returns. Here’s why it has garnered attention as a go-to choice for retirement savings:
1. High Interest Rate:
VPF offers an impressive interest rate of 8.15%, significantly outperforming traditional options like the Public Provident Fund (PPF). This higher interest rate translates to substantial growth potential for your savings over time.
2. Higher Investment Limits:
Unlike EPF, where employees can only contribute 12% of their basic salary and DA, VPF allows individuals to deposit up to 100% of their basic salary along with full DA. This flexibility empowers employees to channel a larger portion of their earnings towards retirement savings, thereby accelerating wealth accumulation.
3. Lower Lock-In Period:
One of the distinguishing features of VPF is its shorter lock-in period of just 5 years, compared to the 10-year lock-in period of EPF. This reduced duration offers greater liquidity and flexibility to individuals, allowing them to access their funds sooner if needed.
4. Tax Benefits:
Investments made in VPF qualify for tax benefits under Section 80C of the Income Tax Act 1961. This implies that contributions towards VPF can help individuals lower their taxable income, leading to potential tax savings and enhanced overall financial planning.
5. Partial Withdrawal Facility:
After the completion of 5 years, VPF provides the option for partial withdrawals, a feature absent in EPF. This added flexibility enables individuals to address financial needs or emergencies without compromising their long-term savings goals.
How to Opt for VPF:
For employees already enrolled in EPF, accessing VPF is a straightforward process. Simply apply for VPF through your employer by filling out the requisite form and specifying your desired contribution amount. The deposited funds will be seamlessly credited to your existing EPF account, consolidating your retirement savings under one umbrella.
In conclusion, VPF emerges as a compelling investment option for individuals seeking to fortify their retirement corpus. With its attractive interest rates, flexible investment limits, tax benefits, and withdrawal options, VPF stands out as a prudent choice for long-term wealth creation and financial security in the golden years ahead. Consider exploring the potential of VPF to maximize your retirement savings journey.
Keep watching our YouTube Channel ‘DNP INDIA’. Also, please subscribe and follow us on FACEBOOK
