Definition
EPFO and Provident Fund
The EPFO administers the Employees' Provident Fund, a mandatory retirement savings scheme for organised-sector employees funded by employer and employee contributions.
The Employees' Provident Fund Organisation (EPFO) manages the EPF, the Employees' Pension Scheme and a deposit-linked insurance scheme for crores of formal-sector workers. Both employer and employee contribute a fixed share of wages, and the balance earns an annually declared interest rate.
EPF contributions and interest enjoy tax benefits within limits, and the corpus is a major pillar of retirement security. The EPFO's interest rate, investment pattern and coverage are closely watched, and it complements the NPS in India's retirement landscape.
Related terms
- Small Savings SchemesSmall savings schemes are government-backed savings instruments such as PPF, NSC and Sukanya Samriddhi that channel household savings into the Public Account.
- PFRDAPFRDA is the Pension Fund Regulatory and Development Authority, which regulates the National Pension System and promotes old-age income security.
- National Pension System (NPS)The National Pension System is a regulated, market-linked retirement savings scheme in which contributions are invested and converted partly into an annuity at retirement.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.