Employees’ Provident Fund

Employees’ Provident Fund

Employees’ Provident Fund is the amount collected by deducting from the salary of a permanent employee of government offices, company and corporations. The government deducts 10% amount from their salary, contributes equal amount from their salary, and contributes an equal amount which creates the bigger funds. Such fund is collected and mobilized by an office which is called employee provident fund office. This office invests the collected fund in various productive sectors and provides a loan to the concerned employees at a reasonable rate of interest. The whole amount deposited in the account as a provident fund will be refunded after the retirement from jobs.

The following are the major functions of Employees’ Provident Fund: -

1. It facilitates compulsory saving which cultivates saving habit of the employers.
2. It helps to maintain constant cash flow even after retirement.
3. It invests the amount so collected in productive and high income yielding sectors like securities issued by government and corporations.
4. It provides easy loan facility to the member employees thus helping them when they require large sum of money for personal purposes.
5. It also distributes dividend out of the profits they gain from investment.