What is General Provident Fund (GPF)?

CalendarToday
timer
1 min read
What is General Provident Fund (GPF)? Blog Image

Overview:

The Department of Personnel and Training (DoPT) recently issued a letter explaining the procedure retiring AIS officers on central deputation can follow to claim GPF.

About General Provident Fund (GPF):

  • It is a type of provident fund account that is available only for government employees in India.
  • The primary objective of this fund is to provide a dependable source of retirement income for government employees. 
  • It allows government employees to accumulate savings over their employment tenure.
  • Eligibility: The following are eligible to subscribe to a GPF account:
    • All temporary government servants who have given their service continuously for one year
    • All re-employed pensioners (except those eligible for admission to the contributory provident fund)
    • All permanent government servants
    • A private sector worker is not eligible for the General Provident Fund
  • Contribution:
    • It is a mandatory scheme for government employees, requiring them to contribute a certain percentage of their salary towards the fund. 
    • The contributions are deducted from the employee's monthly salary, and the amount earns interest at a predetermined rate.
    • Employees can also increase the GPF deductions as per their choice.
  • Withdrawal:
    • Employees can withdraw their savings from the fund upon retirement or resignation from service. 
    • A GPF is flexible, allowing employees to withdraw money from the fund for various reasons, such as marriage, education, and medical emergencies.
    • Employees can also take out loans against their GPF account, subject to certain conditions.
    • Employees who transfer to another government department or leave their job can withdraw their GPF balance or transfer it to their new employer.
    • The GPF sum will be paid to their nominee if the employee passes away.
  • It also offers a competitive interest rate, revised quarterly.
  • The GPF scheme is administered by the Department of Pension and Pensioners’ Welfare, falling under the Ministry of Personnel, Public Grievances and Pensions. 
  • This scheme offers several benefits to government employees, including tax savings, low-risk investments, and guaranteed returns.

Q1) What is a provident fund?

A provident fund is a financial scheme that aims to provide retirement benefits to employees. It is a savings scheme established by employers and/or employees to accumulate a fund over a period of time, which can be withdrawn by the employee upon retirement or under certain specified conditions.

Source: General Provident Fund (GPF) payment on retirement: DoPT explains procedure for these AIS officers