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VPF Is The Best Savings Option Associated With EPF And Earns More Interest Than FD
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News18•19-10-2026, 11:48
VPF Is The Best Savings Option Associated With EPF And Earns More Interest Than FD
- •Voluntary Provident Fund allows employees to make additional contributions alongside mandatory EPF to build a larger retirement corpus.
- •EPF currently offers an annual interest rate of 8.25 percent, making VPF a more attractive savings option compared to traditional FDs.
- •Interest earned on employee contributions exceeding 2.5 lakh rupees per financial year may attract tax based on applicable rules.
- •Contributions to VPF are deducted directly from the monthly salary, helping employees build a disciplined long-term saving habit without separate manual investments.
- •Withdrawal rules are tied to EPF guidelines, and frequent withdrawals for weddings or vehicle purchases should be avoided to protect your retirement savings.
Key Questions Answered
The Employees' Provident Fund (EPF) and Voluntary Provident Fund (VPF) currently earn an attractive annual interest rate of 8.25% as determined by the government.
If both the employee and employer contribute to the PF, tax may apply to the interest earned on the employee's combined EPF and VPF contribution that exceeds ₹2.5 lakh per financial year.
Because VPF is tied to the EPF account framework, funds cannot be withdrawn at any time like a regular savings account. Withdrawals depend on applicable EPF rules, a minimum service period of 12 months, and specific circumstances such as illness, education, or marriage.
