PF Accounts: Employee Provident Fund (PF) account is an investment option that not only provides financial security after retirement but also multiplies your funds with the magic of compound interest. If you also invest in a PF account, then you must know about its power of compound interest and withdrawal rules. It is a great way to secure your future.

Financial security after retirement

This is a retirement savings scheme in which both the employee and the employer make equal contributions. This scheme, run by the Employees’ Provident Fund Organization, aims to keep the employees financially strong after retirement and provide them with financial security. This scheme lays the foundation for your golden future.

Tremendous funds in the long term

By investing in any scheme, you will get either simple interest or compound interest. Simple interest is given only to the principal. But in schemes in which compound interest is available, tremendous funds can be created in the long term.

In compound interest, interest is not only available on the principal, but in this you also get interest on the interest received. Due to this the investor’s money keeps on increasing manifold. It increases your investment rapidly.

How much investment is necessary

In this scheme, interest is given to the contributions made by the employer and the employees. Employees have to contribute 12% of their salary to the PF account. The same contribution is made by the employer, but 8.33% of the contribution made by them goes to EPS and 3.67% to EPF.

The interest rate in this is decided by the government. Interest ranging from 8% to 12% per annum can be obtained on monthly contributions made by both the employee and the employer. In this, the interest rate is calculated with compound interest. That is, your interest grows rapidly with each monthly contribution you make.

When can you withdraw money

  • Any person can easily withdraw money from his PF account after retirement.
  • Apart from this, there are some situations when employees are allowed to withdraw money from the PF account.
  • If a person remains unemployed for a month or more, i.e. he is not on the job, then he can withdraw about 75% of his PF amount.
  • If the employee remains unemployed for 2 months or more, then in such a case the remaining 25 percent amount is also allowed to be withdrawn.

Partial withdrawal

  1. Even before retirement, employees may have many such works for which they need money. Let us know about such cases when employees can make partial withdrawals from PF accounts –
  2. After completing about 7 years of service, employees can withdraw half the amount of their PF account for education.
  3. Apart from this, money can also be withdrawn for marriage, but for that, too employees need to complete about 7 years of service. In this case, also half the amount of contribution can be withdrawn.
  4. Employees can also make partial withdrawals from their PF account to meet health needs. In this, 6 times the monthly basic salary of the employee or the amount of contribution made by the employee to the PF account along with interest, whichever is less, can be withdrawn.

Who can open an EPF account

EPF accounts can be opened only for employees who work in an organization that comes under the EPF Act. Retired or self-employed individuals cannot open an EPF account. For such people, investing in the Public Provident Fund can be beneficial. It is a voluntary savings scheme open to all citizens of India.