What is General Provident Fund

Basically, the Provident Fund Options are of three types- General Provident Fund (GPF), Public Provident Fund (PPF), and Employees Provident Fund (EPF). However, the features, the contributions, the terms and conditions, and the accrued benefits of all the three types of provident funds vary.

Interest rates on General Provident Fund are revised time to time as per the government's regulations. Currently, GPF earns an interest rate of 8 percent.

Once you subscribe to General Provident Fund the money needs to be contributed unless there is a case of suspension. Payment to the GPF is usually stopped 3 months prior to the date of retirement as per the government pension rules.

Eligibility Criteria for GPF Account

Anyone who fulfills the below-mentioned criteria can contribute to the GPF Account:

• A government employee who is a resident of India
• General Provident Fund is compulsory for government employees belonging to a certain salary class
• Any employee of a private sector company is not eligible for the General Provident Fund
• A government employee only needs to contribute a certain percentage of their salary to become a member of the General Provident Fund

How General Provident Fund Works?

General Provident Fund (GPF) is a good saving instrument for government employees. The employee can contribute a portion of his/her salary regularly till the time he/she is employed. On retirement, the employer transfers the total accumulated amount in the GPF account to the employee.

Below are some of the features of (GPF) General Provident Fund:

• As per the Pensioners' official portal, all the government employees can become a member of General Provident Fund once they start contributing a certain portion of their salary to the GPF account.
• While joining the General Provident Fund (GPF) you are required to nominee a family member who deserves the right to receive the total amount saved in the GPF Account. The nominee would require no documentary proof at the time of withdrawing the amount.
• Once the subscriber retires, immediate instruction is issued to release the amount accrued and is transferred on the last working day. The best part is that you don’t need to submit an application to get the final payment from the General Provident Fund.
• In case of death of the General Provident Fund subscriber, the nominee is paid an additional amount equal to the average balance in the GPF account for 3-years following the death of the subscriber, subject to the GPF terms and conditions.

However, the additional amount that is payable shall not be more than Rs. 60,000. According to the Provident Funds rule the nominee is eligible to avail the benefits only when the subscriber was in service for a minimum of 5 at the time of his/her death.

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How is the General Provident Fund Different from PPF?

Check out the below table to understand the difference between the General Provident Fund Scheme and the Public Provident Fund Scheme:

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In a Nutshell

So, if you are a government employee and want to subscribe to a GPD Account then it is a great tool to help you save for your future financial goals like your child’s education, marriage, house, or even a medical emergency. Hope the above-mentioned guide helps you make the most of your General Provident Fund Account.