Provident fund
Also called: PF · Topic: Employment, Unemployment and Informalisation · NCERT: Class 10, Ch 2 "Sectors of the Indian Economy"; Class 10, Ch 4 "Globalisation and the Indian Economy"
Meaning
A provident fund (PF) is a retirement savings fund run under rules set by the government. Each month, both the employer and the employee put in a share of the employee's pay. The money builds up and is available to the worker later, mainly at retirement. It is a key social security benefit of organised-sector jobs. EPFO enrolment is also used as a sign of how many jobs are formal.
Example
A bank cashier's employer deducts a part of her salary for PF every month and adds its own contribution. Her UAN (Universal Account Number) lets her carry the same PF account to a new job with a different employer.
Don't confuse with
- Pension: a pension is a regular payment after retirement. PF is a pool of savings built up during working life.
- Gratuity: gratuity is paid only by the employer, as a lump sum after qualifying service. PF gets contributions from both sides.
Related concepts
- Organised sector
- Unorganised sector
- Job security
- Overtime
- Paid leave
- Gratuity
- Pension
- Social security
- Trade unions
- Collective bargaining