What is pension provident fund?

Author

William Cox

Published Mar 14, 2026

What is pension provident fund?

Provident fund is another name for pension fund. Its purpose is to provide employees with lump sum payments at the time of exit from their place of employment. This differs from pension funds, which have elements of both lump sum as well as monthly pension payments.

Considering this, is pension and provident fund the same?

The main difference is that if a pension fund member retires, the member gets one third of the total benefit in a cash lump sum and the other two-thirds is paid out in the form of a pension over the rest of the member's life. A provident fund member can get the full benefit paid in a cash lump sum.

Subsequently, question is, what is Pension Fund PF? EPF Pension which is technically known as Employees' Pension Scheme (EPS), is a social security scheme provided by the Employees' Provident Fund Organisation (EPFO). The scheme makes provisions for employees working in the organized sector for a pension after their retirement at the age of 58 years.

Hereof, what is a provident fund and how does it work?

A provident is is a retirement fund run by the government. A pension plan is a retirement plan run by an employer. Pension funds operate much like an annuity. Provident funds operate more like a 401(k) or savings account, where the money will run out eventually.

Can I withdraw my pension contributions in PF account?

Yes, you can withdraw the contributed EPS amount along with your EPF balance. But the condition is you must not have completed 10 Yrs of service. When you withdraw EPF, then you receive EMPLOYEE+EMPLOYER EPF contribution+Interest earned on this EPF.

Does Provident Fund get taxed?

The first R25 000 of your provident fund withdrawal is not taxed, so if this is your first (retirement fund) withdrawal you will pay no tax, If it is your second, you would most likely pay tax at 18%.

How provident fund is calculated?

Interest on the Employees' Provident Fund (EPF) is calculated on the contributions made by the employee as well as the employer. Contributions made by the employee and the employer equals 12% or 10% (includes EPS and EDLI) of his/her basic pay plus dearness allowance (DA).

What percentage of salary is provident fund?

A pension or provident fund is offered by an employer to help its employees save for retirement. Many employers make it compulsory to join its retirement fund, but employees can usually decide what percentage of their salary to contribute, which is generally between 5% and 15%, said Sing.

How do I withdraw my pension fund?

If service period has been less than 10 years, both PF balance and the EPS amount will be paid. To get EPS amount, in the Composite Claim Form (Aadhaar or Non-Aadhaar), along with choosing 'Final PF balance', also choose the 'pension withdrawal' option.

What is Provident Fund and types?

Types of Provident Fund. Provident fund is a pension scheme where 12% of sum will be deducted from an employee's basic salary on a monthly basis to add to the employee's future savings. Both the employer and the employee contributes certain percentage to this deduction.

Can I get my provident fund if I resign?

The Income Tax Act says that you can only withdraw from your provident fund if you resign, or are dismissed or retrenched. It says that your membership of the provident fund only stops when you actually stop being employed, or when the fund itself is terminated in terms of the Pension Funds Act.

How does pension payout work?

A pension is a type of retirement plan that provides monthly income in retirement. With a pension plan, the employer contributes money to the pension plan while you are working. The money will be paid to you, usually as a monthly check in retirement, after you reach a specific retirement age.

Where can I find my pension fund account number?

On the EPFO member portal, as soon as the employee has logged into his/her account, the Employee Pension Scheme link will be displayed on the left-hand side of the page. Click on that to know all the details of your EPS account.

What is the benefits of provident fund?

Tax benefits

Apart from the fact that an employee's contribution towards an EPF account is eligible for tax exemption under Section 80C, the interest rate earned is exempt from income tax. According to experts, your EPF account continues to earn interest even if it has been lying dormant for more than 3 years.

What is the PF rule?

Under EPF scheme, an employee has to pay a certain contribution towards the scheme and an equal contribution is paid by the employer. As per the rules, in EPF, employee whose 'pay' is more than Rs. 15,000 per month at the time of joining, is not eligible and is called non-eligible employee.

What is the use of provident fund?

The primary purpose of PF fund is to help employees save a fraction of their salary every month so that he can use the same in an event that the employee is temporarily or no longer fit to work or at retirement. Employers and employees both contribute @12% of wages in contribution accounts.

Why provident fund is deducted?

Deduction of Provident Fund from Salary

From the moment you start working, you and your employer start contributing 12% of your basic salary (plus dearness allowances, if any) into your EPF account. The remaining 8.33% goes from your employer's side and is diverted to your Employee's Pension Scheme.

Is Provident Fund Safe?

Yes. Saving in provident fund is safe in India because this is monitored by the government of India. The main motive to establish provident fund by the government was to provide social security & financial support to the employees after their retirement.

How do I pay my provident fund?

3.Steps for PF Payment Online

Ensure PF details of establishment such as establishment ID, Name, address, exemption status etc shown are correct.
From 'Payment' option drop down select 'ECR upload'
Select 'Wage Month', 'Salary Disbursal Date', Rate of contribution and upload ECR text file.

Can I lose my pension if I get fired?

Once a person is vested in a pension plan, he or she has the right to keep it. So, if you're fired after you've become vested in the plan, you wouldn't lose your pension. It's also possible to be partially vested in a plan, which would mean that you could keep the portion that has vested even if you're fired.

What is the difference between a provident fund and a retirement annuity?

The purpose of a pension fund is to pay you a pension in retirement. At retirement, the same distinction as between a pension and a provident fund applies. A retirement annuity is a retirement fund for individuals who are self-employed, or whose employer does not offer a work place fund.

How long can a company hold your pension?

Employers also can choose a graduated vesting schedule, which requires an employee to work 7 years in order to be 100 percent vested, but provides at least 20 percent vesting after 3 years, 40 percent after 4 years, 60 percent after 5 years, and 80 percent after 6 years of service.

Who is eligible for PF pension?

You must be a member of the EPFO. You must have attained the age of 58 years. In case you defer the pension for 2 years (until you reach the age of 60 years), you will be eligible to receive the pension at an additional rate of 4% per year. You must have completed at least 10 years of service.

What is pensionable salary?

Pensionable pay is defined by the rules of the pension scheme. Typically, pensionable pay is basic salary, not including, elements of your earnings such as commission, bonuses and overtime.

How can I check my pension balance?

You can check the EPF balance by visiting the Employees' Provident Fund Organisation. Keep your UAN number handy. Follow these steps: - If you already have a login ID: Open the EPF website and click on 'Our Services' link and select the 'For Employees' Tab and in the next page click on 'Member Passbook”.

When can I get pension?

The State Pension ages have been undergoing radical changes since April 2010. The changes will see the State pension age rise to 65 for women between 2010 and 2018, and then to 66, 67 and 68 for both men and women.

Will I get interest on PF after resignation?

Therefore, even after leaving one company, the PF account continues to earn interest and is not termed inoperative PF account till such a situation rises till age 55. However, during the period when contributions don't get credited to the PF account, the interest rate earned does not remain tax-free.

When can I withdraw my pension?

Under rules introduced in April 2015, once you reach the age of 55, you can now take the whole of your pension pot as cash in one go if you wish. However if you do this, you could end up with a large tax bill and run out of money in retirement. Get advice before you commit.

Can we withdraw full PF amount?

New Rule : The EPF members can not withdraw full PF amount before attaining the age of retirement. The maximum withdrawal on cessation of employment cannot exceed an amount aggregating employee's own contribution and interest accrued thereon. You can withdraw your contributions + interest portion only.

How do I transfer a pension fund?

Transfer a defined contribution pension (such as a personal pension) If you are considering transferring from a defined contribution scheme then you will need to get a formal pension transfer value from the pension provider or scheme administrator. Alternatively you can find a transfer value on your annual statement.

Is PF mandatory?

Yes, contributing to EPF is mandatory for the employees who have a basic salary plus dearness allowance is up to Rs. 15,000 (earlier it was Rs. 6,500). And those who are earning above Rs.

Can I get my pension contributions back?

Taking a refund

If you leave your pension scheme, you do not lose the benefits you have built up. If you leave your defined benefit or money purchase pension scheme having been a member for less than two years, you may be able to take a refund of the contributions that you've paid, if the scheme's rules permit this.

How can I withdraw my full PF amount online?

How to Withdraw PF Amount Online in 5 Steps:

Visit the EPFO e-SEWA portal and log in using your UAN and password.
Then, check whether you have updated and linked your Aadhaar number to your UAN.
Next, click on the 'Online Services' tab on the UAN dashboard and then click on 'Claim (Form-31, 19 & 10C)'.

When can I withdraw from my pension fund?

Once you reach your 55th birthday you can withdraw all of your pension fund. You can take up to 25% as a lump sum without paying tax, and will be charged at your usual rate for any subsequent withdrawals.

How can I transfer my PF pension amount online?

When you transfer your old EPF account to a new employer

An employee should transfer his provident fund Using EPFO's online facility from the previous employer to a new employer. You can do it offline and online. Online you can transfer from the EPFO UAN Portal using Online Services->Transfer Request.

Can we withdraw pension amount?

Yes, you can withdraw the contributed EPS amount along with your EPF balance. But the condition is you must not have completed 10 Yrs of service. When you withdraw EPF, then you receive EMPLOYEE+EMPLOYER EPF contribution+Interest earned on this EPF. Along with that, some % of EPS contribution also be paid.

How do I get a pension certificate?

Once you are leaving the job, then you have to fill the Form 10C. In the form 10C, there are options either to withdraw EPS or apply for EPS Scheme Certificate. Once you chose the options to issue EPS Scheme Certificate, then your employer sends the same to EPFO and then EPFO will issue you an EPS Scheme Certificate.

How much PF can be withdrawn?

An employee can withdraw upto 90% of total PF balance within one year before retirement, advance on unemployment upto 75% of total PF balance, etc. You can make final withdrawal of your EPF accumulations on retirement or two months after ceasing to be an employee.

Why my pension contribution is not transferred?

The reason your pension money is not transferred to the ne pf account is that your pension doesn't depend on that amount, it depends on one formula that needs your service history. So, when you apply for PF transfer from Old Pf to new Pf, your service history gets updated and your pension amount stays 0.

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