People need to plan for their post-retirement life by making necessary investments from their early age itself. There various schemes available, Employee Provident Fund (EPF) and Personal Provident Fund (PPF) are the most popular investment schemes in low risk-return space. In both, the person keeps investing small amounts and ends up with a big amount at the time of his/her retirement. PPF and EPF are kinds of provident funds in India. Both PPF and EPF are deducted under section 80C of the income tax act.
EPF
Let us first understand what EPF is.
Employee’s Provident Fund (EPF) is a retirement benefits scheme for all salaried employees. The EPF interest rate is notified every year by the 'EPFO', a statutory body under the Employees’ Provident Fund Act, 1956. Only employees of companies listed under the EPF Act can invest in the EPF. Employers and employees are obliged to provide 12% of the employee’s basic salary and dearness allowance monthly to the EPF.
PPF
Whereas PPF or Public Provident Fund is a tax-free long-term saving scheme that focuses on inducing small savings like investment long-true returns on the same. It is a long-term investment scheme of 15 years. It is regulated by the Indian government, where its major role is to set the interest rate for the scheme. The rate of interest for PPF accounts is revised by the Central Government quarterly. The motive of the PPF is to give a long-term retirement planning alternative to those people who may not be covered by the provident funds of their employers or may be self-employed.
So both EPF and PPF are types of Provident Fund retirement scheme that saves a certain amount of your money to have a good sum of savings for post-retirement life. Both schemes offer assured returns. However, their interest rates are revised by the government periodically.