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Meaning of providential fund?

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  • 10 years ago
    Favorite Answer

    Provident Fund is the fund which is composed of the contributions made by the employee during the time he has worked along with an equal contribution by his employers. It is calculated as a percentage of his salary, say, 12 % and is returned to him on his retirement.

    For extra information:

    he provident fund was originally set up in a bid to provide monetary security to employees when they retire. Too often, people find that the golden years of their life are years marked by financial inadequacy and dependency on relatives or children. The provident fund is designed to provide the retiring individual with dignity and security. However, it has, over the years, developed into a broad plan for social security which covers the retirement, buying houses, medical expenses and related expenses.

    There are different types of Provident Funds. They are :-

    - Statutory Provident Funds: - All industries and establishments that employ 20 or more people are bound to contribute towards these funds. These funds specifically cover those whose income is below a certain limit prescribed by the government.

    - Voluntary Provident Funds: - The contributions to this fund are voluntary. This is applicable for all those whose salary is beyond the limit specified by the government.

    - Recognized Provident Fund: - This is a fund wherein the contributions are recognized for income tax calculations.

    - Unrecognized Provident Fund: - As the name suggests, contribution to these funds are not recognized by the Government.

    - Public Provident Fund: - This kind of Provident fund is designed for self-employed people like doctors, lawyers, engineers, businessmen etc.

    A person who is a member of a provident fund can withdraw money from the fund upto a maximum ceiling set by the government after attaining a certain age, say, 54 or at actual retirement. In addition there are, generally, provisions for withdrawal of the amount, such as, acquisition or construction of property or repayment of loans taken for the same, treatment of illness, for marriage expenses, for purchase of equipment to alleviate the hardships caused by handicap etc.

  • ?
    Lv 4
    4 years ago

    Define Providential

  • 10 years ago

    1. Providing for future needs or events.

    like retirement account. savings account,

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