This one is especially for Employees who are contributing to EPF. 12% of (Basic + DA) is the mandatory contribution which every employee makes to EPF. Everyone is aware of this. Nothing much to explain here.
What I wanted to write about is actually VPF or Voluntary Pension Fund. It is a part of EPF itself which you can contribute on a voluntary basis above this 12%. The features and rules of this are the same as that of EPF. No difference. You just need to contact your accounts team to enrol for this.
The main advantage here is the interest rates of VPF. At the time of writing this blog, the interest rate of VPF or EPF is 8.5% but that of PPF is 7.1%. Even though rates are subject to revision every year, but still VPF wins currently as the returns are higher.
Another thing worth noticing is the interest rates had always been above 8.5% in the last 30 years at least giving it an edge over PPF.
Other main difference is that PPF account matures after 15 years but EPF you can withdraw whenever you are out of a job for 2 months.
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