Provident Fund: What to do When Your EPF Account Matures?

Provident fund

Employees’ Provident Fund is a saving scheme backed by the government of India. It’s aim is to encourage retirement savings amongst India’s professionals. As per the terms of this scheme you contribute to your EPF account through a percentage of each month’s salary and your employer matches this contribution. You can then access a lump sum amount upon maturity of your EPF account when you retire. To maximise the EPF maturity amount further, you should consider investing it in lucrative vehicles.

Since EPF is meant for your retirement, it is prudent to avoid risky investment options. So, here’s a look at instruments, which help you maximise your EPF maturity proceeds while keeping the amount safe.

Senior citizen fixed deposit
One of the most viable options is a
fixed deposit (FD) for senior citizens. These are FDs tailor-made to meet the needs of retirees. Senior citizen FDs are safe, yield attractive returns, and give tax benefits. For instance, when you invest in a Senior Citizen FD with top issuers like Bajaj Finance, you enjoy safety and guaranteed returns. The Bajaj Finance Senior Citizen FDs have an FAAA CRISIL rating meaning your investments are as safe as can be. On the returns front, you can enjoy attractive senior citizen fixed deposit interest rates of up to 9.10% when you stay invested in a cumulative FD for at least 36 months. Moreover, you can benefit from a higher interest rate when you renew your fixed deposit. Choose to invest in cumulative fixed deposits for returns on maturity or a non-cumulative FD for regular returns.

Senior Citizens Savings Scheme (SCSS)

SCSS is a savings scheme that is offered by banks and post offices, and its government backing makes it a safe one to invest in. You can choose to deposit a maximum of Rs.15 lakh individually or Rs.30 lakh jointly with your spouse. SCSS yields a significant interest rate of 8.5% to 9.5%, which is higher than most other saving schemes. It has an investment horizon of 5 years but should you wish to continue to reap these benefits, you can extend it by 3 more years. On the tax front, while you can claim a deduction towards the deposit under Section 80C of the Income Tax Act, the interest is taxable.

Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Apart from these schemes can also choose to invest in a government retirement programme known as Pradhan Mantri Vaya Vandana Yojana. PMVVY is an annuity plan that offers an interest rate of 8% and a regular source of income. The annuity plan has a lock-in period of 10 years, however, you can choose to receive monthly, quarterly, half-yearly or annual pension based on your needs.

National Savings Certificate (NSC)
National Savings Certificate is another safe investment avenue that is offered by post offices. It yields attractive returns of 8% and has a tenor of 5 or 10 years. The minimum amount that you need to invest is Rs.100, and there is no limit on the maximum amount as long as you invest in multiples of Rs.100. On the tax front, you can claim a deduction of up to Rs.1.5 lakh under Section 80C, but the maturity amount is wholly taxable.

Post Office Monthly Income Scheme (POMIS)
Alternatively, you can consider the Post Office Monthly Income Scheme that is offered by post offices. It is a monthly income scheme that carries no risk whatsoever for a stress-free retirement life. You have to make an initial deposit of Rs.1,500 to start investing in POMIS and you can choose to make a maximum investment of Rs.4.5 lakh individually, or Rs.9 lakh jointly. The scheme has a lock-in period of 5 years and yields interest of 7.3%. To continue enjoying these benefits, you can reinvest the corpus for 5 more years. Despite offering such attractive features, POMIS doesn’t offer any tax benefits.

So, choose the right investment option for your EPF maturity amount and secure your golden years with adequate financial backup!


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