Which is better: EPF or VPF?

Money plays the most crucial role in our lives, do you agree? That is exactly why we start thinking about saving and investing for a rainy day, or most importantly – we save now, so we can have some for the future. It is always best to pile up some cash for the days that we would not be earning. Suppose money does play a crucial role in our lives; how terrified it must be after retirement when we would not be earning any. This, though, is the beginning of our retirement savings, don’t you think so?

Retirement Savings – Explained

Saving money always has a goal, which means we save for particular objectives. Retirement saving in that context aims to fulfill the financial needs after retirement. Firstly, a retirement savings plan needs to be made based on the time we decide to retire and the life we wish to live. For the last few decades, the younger generation is currently planning to retire early. In the case of the EPF, it is a mandatory saving scheme from the government under some terms and conditions, but there are also voluntary provident funds, which you can choose to invest in by choice.

These two are investment schemes that are low-risk, highly stable, and also offer good returns. EPF and VPF are helpful for long-term goals, i.e., retirement savings. However, only with the future as a reminder did the provident funds come into existence. The provident funds provide financial stability to the user. Under these schemes, employees save a part of their salary every month. These can be used as savings after retirement.

What is the Meaning of EPF?

EPF is commonly known as the Employment Provident Fund. Under the EPF scheme, it is mandatory for a company owning more than 20 employees to have this scheme. Also, employees who earn below Rs. 15,000 do not have to contribute towards this scheme, and it means it is only the employees who earn more than Rs. 15,000. So, this means it is mandatory for salaried people to have enrolled under the EPF scheme. As a part of the scheme, the employee saves 12% of his monthly salary in the EPF scheme based on the organization they are working for. The employer also deposits the same amount in the employee’s EPF account. The amount saved in this scheme is also eligible for a tax deduction.


It is commonly known as the Voluntary Provident Fund. As the name suggests, this scheme is not a mandatory scheme. Any employee can deposit their money voluntarily. This amount saved is their EPF amount + their savings, i.e., the employee chooses to invest an additional amount as their savings. However, the employer does not invest in the excess money added by the employee. VPF savings are also saved in the EPF account as it does not have a separate account. The employee can also save their total earnings in a VPF account. The VPF amount can be withdrawn after five years.


The schemes EPF and VPF can only be accessed by salaried employees. The organisation must also contain above 20 employees. The EPF scheme is mandatory in both government and private organizations. Also, the interest rates that are offered by PF could change from time to time, but you can just Click now to check PF interest rate today.

Difference between EPF and VPF schemes

1. EligibilitySalaried employees of India with a salary over Rs. 15,000.Salaried employees of India
2. Employee Contribution12% of their basic salaryVoluntary
3. Taxation On Maturity ReturnsTax freeTax free
4. Loan AvailabilityPartial Withdrawals availablePartial Withdrawals available
5. Period of investmentUp to the employee’s resignation or retirement, whichever is applicable soonerUp to the employee’s resignation or retirement, whichever is applicable sooner.
6. Time for tax-free withdrawalAfter a period of 5 years.After a period of 5 years.
7. Interest rate8.10%8.10%
8. Tax BenefitUp to 1 lakh rupees based on the sec 80cUp to 1 lakh rupees based on the sec 80c
Difference between EPF and VPF schemes


In the EPF scheme, employees are supposed to contribute 10-12% of their salary based on the organization. However, a VPF scheme employee has no restrictions. They can also contribute their total salary under the VPF scheme.


The EPF rates are fixed, but this could change, and if it does, it will change across the whole country as it will be decided by the Central Board of Trustees. In the case of VPF interest rates, too, the same thing would happen. However, the interest rate of VPF is similar to EPF.

Tax Benefits

If the employee resigns or retires before five years, then he/she is required to pay tax on the savings of both EPF and VPF. However, if he/she retires or resigns after five years, then he/she is exempted from the tax.


It is mandatory for salaried employees to register under the EPF scheme. However, if the employee wishes to grow his retirement savings, it is advisable to invest in VPF as well. The self-employed and unemployed citizens are not permitted to use EPF and VPF schemes. Here we have covered everything you have to know about the two schemes in detail.