Curious About VPF? Seeking Guidance on Limits and Procedures

Understanding VPF

Please, can anyone tell me what VPF is? I know about EPS and EPF, but this is the first time I have seen VPF. Is there a ceiling limit for VPF? What is the procedure for VPF? Please guide me in this direction.

Regards

EPF is usually an extension of VPF. In simpler words, in EPF, both the employer and employee contribute 12% each. Additionally, the employer is expected to cover the account handling and insurance charges, which are minimal.

Under the EPF scheme, an employee can voluntarily increase their share from 12% to a maximum of 20% to enhance their retirement benefits. However, the employer is not obligated to increase their contribution beyond 12% plus the account handling charges.

As these changes are initiated voluntarily by the employee, it is referred to as VPF or Voluntary Provident Fund.

I hope this clarifies your doubts.

Contributions

Voluntary Provident Fund (VPF)

VPF is applicable for employees who are covered under the Employee's Provident Fund.

How can an employee opt for VPF?

Any employee can opt for VPF by mentioning the details, like the percentage he/she wants to opt for on his/her Basic + DA + Food Allowance, and provide the same in writing to the employer. After that, the mentioned percentage of the amount on Basic + DA + Food Allowance will be contributed towards VPF. His/Her contribution will continue until he/she is in service.

From the Employer's Side:

The employer can add this VPF amount along with the EPF amount under the contribution recovered from the employee while mentioning Form – 12A or can have two separate columns, one for EPF and the other for VPF. The same thing in the PF Challan can be mentioned in a separate box given under Employee's Provident Fund, which says VPF. In yearly returns, we can mention it under a column called "RATE OF HIGHER VOLUNTARY CONTRIBUTION (If Any)" in Form 6A, and a similar column can be added in Form 3A. This will help to have more clarity.

When it comes to mentioning in the Withdrawal form, i.e., particularly in Form-19, we need to mention the total amount of employee contribution, which would include both EPF and VPF.

Note: There is no limit on the percentage that one can choose to opt for. Admin/EDLI Charges are applicable only on the total wages, and thus it will not require the employer to pay extra charges.

Regards,
Babu

Appreciate And Validate

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Thank you, Suresh. If we are cutting VPF from the salary, shall we get the government interest? Do we need to obtain any permission from the employer to deduct the VPF?

Not only will you receive interest on your VPF plus the employer's contribution of 12%, but it will also be free from attachment of any decree by court. You simply need to request your employer to deduct the proposed VPF amount from your salary. I recommend maintaining your VPF as a multiple of 12%, for example, 12/24/36 onwards.

Regards,
Suresh

Employee's PF Contribution

Employee's PF is 12% of the Basic + DA + Other pay (as described by the organization). The remaining 88% can be VPF, which means 100% of your Basic Pay + DA + Other Pay can be contributed towards the EPF. However, the organization's contribution will be 12% towards the EPF. There are many who live with the other allowances after contributing 100% (12% + 88%) towards the EPF!

Regards,
Rajusiachen

To know the upper limit of VPF, please review the link provided below, especially the post by me: [Voluntary PF Contribution HR Executive](https://www.citehr.com/456450-voluntary-pf-contribution-hr-executive-pg2.html).

Regards

For voluntary higher rate of PF contribution (beyond 12%), there is no lower limit or upper limit prescribed in the Act.

Regards,
D. Gurumurthy
HR & IR Consultant, Hyd.

Dear all, does this mean that an employee can contribute a higher amount to VPF? Is there a limit, or can they contribute any amount they wish to?

Hi, I just got to know about VPF. Does increasing VPF employee contribution increase the pension amount in retirement? If it does, by what percentage will the increase be? I am retiring next year - how much should I increase my contribution to increase the pension? Can I contribute to VPF with a retrospective date? I am employed before 2014.