What is General Provident Fund (GPF)

What is the General Provident Fund (GPF)?

GPF full form is the General Provident Fund. It is a savings pension plan introduced in 1960 for government employees in India. It allows employees to contribute a portion of their salary to the fund, which earns interest. 

The accumulated amount, along with GPF interest rate, is payable at the time of retirement or as specified. GPF aims to provide financial security and support to government employees post-retirement.

Features of General Provident Fund Account (GPF Account)

The key features of the GPF pension plan are mentioned in the following table:

General Provident Fund (GPF) Interest Rate

The GPF interest rate for the fourth quarter of 2023-2024 (January-March) is 7.1% p.a., which is announced by the Ministry of Finance of the Government of India. The GPF interest rate is reviewed and revised quarterly by the government. 

NOTE: 

• It is important to note that the GPF interest rate is different from the EPF interest rate. 

• The EPF interest rate for the entire Financial Year (FY) 2023-24 is set at 8.25% p.a.

Eligibility Criteria for GPF Account

You can contribute to the General Provident Fund Account if you fulfil the below-mentioned criteria:

• Open to central government and specific state government employees.

• Employees must not have chosen any other government or organizational provident fund scheme.

• Temporary employees with one year of continuous service qualify for GPF.

• Compulsory for government employees in specific salary classes.

• Government employees need to contribute a specified percentage of their salary to join GPF.

Exclusion Criteria:

• Ineligible for employees on deputation outside India.

• Excluded for employees in private sector companies.

How the General Provident Fund Works?

You can understand the working of the General Provident Fund (GPF) from the steps mentioned below:

1. Join the General Provident Fund (GPF):

   If you are a government employee in India, you need to join the GPF. You have to inform your employer of your desire to contribute.

2. Choose Your Contribution:

   You can contribute between 6% and 100% of your basic salary each month. Your fund grows faster as you contribute more. 

3. Make Regular Contributions:

   Your chosen amount is automatically deducted from your salary every month and deposited into your GPF account.

4. Earn Interest:

   Your GPF account earns interest at a rate fixed by the government. Currently, the GPF interest rate is 7.10% p.a. in January 2024. This interest gets added to your balance every year.

5. Watch Your Funds Grow:

   Your GPF balance gradually gets accumulated over time, with regular contributions and interest.

6. Reaching Maturity:

   You can access your GPF funds upon retirement or after completing ten years of service (whichever comes later).

7. Withdrawal Options:

   You can choose to withdraw the entire amount as a lump sum or take monthly payments in instalments upon maturity.

8. Partial Withdrawals:

   You can also make partial withdrawals before retirement for specific purposes like medical expenses, children's education, or house purchase.

How to Open a GPF Account?

Follow these steps to open a General Provident Fund (GPF) Account:

Step 1: Contact your department's Drawing and Disbursing Officer (DDO). Inquire about the GPF account opening process and required documents.

Step 2: Obtain the "Account Opening Form" (usually provided by the DDO or Accountant General's office).

Step 3: Provide details like name, designation, date of joining, and chosen contribution percentage (6% or 10% of basic salary).

Step 4: Your DDO verifies the form and forwards it to the Accountant General's office (AG) along with relevant documents. The AG assigns a unique GPF account number.

Step 5: You will receive your GPF account number and General Provident Fund login details.

Your chosen contribution percentage will be automatically deducted from your salary each month and credited to your GPF account.

Contribution Amount in General Provident Fund (GPF) Account

As per the General Provident Fund Rules, 1960 for the Central Services, the minimum contribution to a GPF account is 6% of the basic salary, while the maximum contribution is 100% of the basic salary. However, some state governments and public sector organizations may have different minimum and maximum limits.

Employee's Choice: 

Within the minimum and maximum limits, you can choose how much you want to contribute to your GPF account.

NOTE: There is not a centralized system to check your General Provident Fund (GPF) balance in India. The process for General Provident Fund  balance check typically involves the website of your state's Accountant General (AG).

Advances on GPF Account

The General Provident Fund (GPF) in India allows you to avail advances for various purposes under the following specific conditions:

1. Eligibility:

   • Any subscriber with a minimum of 5 years of service can apply for an advance.

   • The advance amount depends on various factors like your salary, balance in the GPF account, and purpose of the advance.

2. Advances:

   • You can get up to 12 months' pay or three-fourths of the GPF balance, whichever is less.

   • In special circumstances, a 90% withdrawal is possible with sanctioning authority approval.

3. Eligible Advances:

   You can get an advance for these purposes-

   • Illness of yourself or a dependent family member

   • Expenses for the higher education of children or spouse

   • Meeting wedding expenses of self or dependent children

4. Sanctioning and Credit:

   • Sanctioning authority must approve and credit the advance within 15 days of the request.

   • No documentary proof is needed to raise a claim for GPF advance.

5. Repayment Terms:

   • Amount borrowed must be repaid, with a maximum repayment period of 60 months in instalments.

6. Interest-Free Advances:

   • No interest is charged on GPF advances.

   • Multiple claims for GPF advances are allowed throughout the subscriber's career.

7. Fresh Advance Requests:

   • Even if repaying an existing advance, a request for a new advance can be made.

8. Conditions for Multiple Advances:

   • If an advance is granted before complete repayment of an existing one, the outstanding amount is added to the new advance.

   • Instalments for recovery are refixed based on the consolidated amount.

Maturity and Withdrawal from GPF Account

The maturity of your General Provident Fund (GPF) Account and the withdrawal process from this account is mentioned below:

• GPF matures upon your retirement or when you reach superannuation age.

• Withdrawal is allowed after ten years of service or with ten years left until superannuation, applicable for continuous government service.

• Resignation allows immediate withdrawal of GPF balance, irrespective of service tenure.

• Post maturity, you can either withdraw the full balance or choose a monthly pension.

• In the event of your demise, the GPF balance is paid to the nominee or legal heir.

NOTE: GPF withdrawal rules for state govt employees are similar to those for central government employees.

Difference Between GPF vs. PPF vs. NPS

The following table shows the difference between different pension plans, like the General Provident Fund (GPF) Scheme, National Pension Scheme (NPS), and the Public Provident Fund (PPF) Scheme:

* It is advisable to use an NPS Calculator to estimate your returns from investments in the National Pension Scheme.

In a Nutshell!

The General Provident Fund (GPF) serves as an important financial instrument for government employees. This pension plan facilitates systematic savings and ensures financial security during retirement. This employee-contributory scheme has proven to be a reliable means of long-term wealth accumulation while emphasizing fiscal discipline. With its structured approach, the GPF stands as a cornerstone in promoting financial stability and well-being among government personnel.