With retirement comes your golden age. To enjoy this period, and reap the benefits of your hard work, you need a lot of financial planning. Provident fund (PF) is one such saving scheme that allows you to live golden age in peace! Besides, if you are registered under the PF scheme, you can avail the pf benefits in case of death, through your successors. Hence, there are various types of provident fund schemes that make it easy for all different types of employees, government officials, freelancers, etc to create a pool of savings for their future. These come with their own set of benefits of voluntary pf, EPF, etc. In this blog, we dive into the various benefits of PF account that make this one of the most popular savings mechanisms for individuals.
What is PF?
Simply put, a provident fund is the fund for your future. There are many ways it can help you. This includes superannuation, health issues, death, and disability. Hence, it is your savings fund.
Benefits of PF Account
To avail the benefits of a pf account, it is important to undergo the PF registration process. Let’s see the varied advantages of registering under the PF scheme.
Security for the Future
The most important benefit of pf is obviously the fact that it creates a sense of security for the future. When you have a pf account, you are not left adrift when your working days are close to over!
Also Read: How to Create an EPF Login?
Compounding as benefit of PF
Compounding is the process of adding interest on the existing interest. Hence, when you enroll in the EPF scheme, one of its vital benefits is that the compounding creates a snowball effect for your future savings.
Comfort for retirement
Retirement comes with a lot of new adventures, but, also some concerns. With that said, enrollment to the PF account provides a pillow of comfort during the retirement of an employee. In fact, often on, people are able to start successful business ventures from the PF and other savings.
Partial withdrawals in emergency
One important benefit of epf is that employees can choose to withdraw from their savings, in case of any emergencies. This includes health, covid 19 and personal emergencies, etc. This voluntary withdrawal allowance helps in gaining more confidence of the employees.
Contributions by both
An integral benefit of an epf account is that the employer and employee both need to contribute for the employee’s future. These contributions work out in the favor of enhancing employee welfare at the workplace, which is crucial at this point. You can check out the details about PF contributions in this blog on How to calculate EPF.
Loan on PF Balance
EPF account holders can get a loan at nominal interest rate against the balance of their PF. These loans are usually short term and disbursed immediately to entertain emergent contingencies.
Benefits of Voluntary PF
Now, as we all know from the PF applicability there is a threshold limit for salaried employees, below which PF registration is mandatory. For others, the registration under PF scheme is not mandatory, but voluntary. People opt for this scheme on their own accord because of the various benefits of voluntary PF. Let’s delve into these multiple benefits of voluntary PF.
When you registered under EPF, the employer and employee contribution is fixed. However, when you opt for the voluntary PF registration, you can easily accelerate your savings by contributing more than the fixed 12%. Hence, for employees, if they want to avail accelerated benefits of PF, they can opt for the voluntary PF and contribute more of their income to their PF Account. These additional deposits make a significant impact in the long run.
Tax benefits of PF
Be it voluntary or mandatory, provident fund registration comes with multiple tax benefits. The PF contributions to an employee’s account are subject to deductions from the income tax calculations. This leaves the beneficiary with more disposable income. Besides, other tax benefits of PF include:
- Earnings on your PF account are tax – free until the withdrawal of PF amount; and
- Voluntary pf registration also helps in limiting your tax liability by strategic planning.
Accessibility and transparency
Another major PF benefit is that the entire regulatory portal is online and accessible to all. So, whether you’re an employer or an employee, you get to access your PF account easily with the UAN and other details.
The PF account is portable. So, even if you switch your vocation or career. the amount in your provident fund will remain the same. This is a very important advantage of pf.
What are the PF Benefits in case of Death?
The benefits one can avail from PF in case of death vary based on the different types of PF schemes applicable to the deceased. Moreover, the PF benefits in case of Death are passed on to the nominee or legal heir of that deceased account holder. Let’s see these benefits in brief:
In EPF Account
The accumulated funds shall be transferred to the nominee. This includes the contributions as well as compound interest.
If the deceased was also enrolled in the pension scheme, their legal nominee will receive a monthly pension from the deceased’s account.
The Employee Deposit Linked Insurance (EDLI) is the insurance component of provident fund savings. It is a great PF benefit in case of death. In the event of an employee’s death a lump sum amount will be paid to the Nominee.
To conclude, there are numerous benefits of provident fund for salaried and non – salaried individuals. It is one of the most integral aspects for the future financial planning for young professionals. Thus, as a result of that, it becomes mandatory for companies to ensure pf benefits are availed for employee welfare. Contact us today to get your PF Account!