What is VPF?
Background
VPF (Voluntary Provident Fund) is an optional extension of EPF where you contribute more than the mandatory 12% of basic salary. It earns the same interest rate as EPF and is backed by the government.
Explanation
You request your employer to increase your PF deduction above 12% (up to 100% of basic + DA). Employer contributions do not increase, but your extra contribution grows at EPF rates and enjoys similar tax treatment, subject to current interest taxation rules. VPF suits conservative investors who want more fixed-income exposure.
Example
On a ₹50,000 basic salary, raising PF contribution from 12% to 20% directs an extra ₹4,000 per month into PF. Over 20–25 years this additional, safe contribution can add several lakhs to your retirement kitty.
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