5 Reasons Why The Provident Fund Is So Important To The Salaried Class
Have you heard about the Employee Provident Fund? If not, it probably has something to do with your employer. The EPF is primarily utilized by salaried employees. These individuals are grouped into one and called the salaried class. Well, the Employee Providence Fund is very important to these workers for many reasons. You’ll find out why this is the case below.
First and foremost, it is important to understand that an EPF account comes with some tax parks. For starters, the contributions that you make to that account are going to be eligible for tax exemptions. On top of that, the interest rate that you earn will be exempt too. As long as you keep your EPF account active for five years, you will not be taxed when you make a withdrawal. This means that you’ll get more for your money. It is easy to see why the EPF investment Malaysia is one of the wisest investments you could ever make.
You’ll also want to take advantage of the Employees Deposit Linked Insurance Scheme. In the event of your death, your registered nominee will receive money. When you own an EPF account, you will automatically become qualified for the scheme. And, you don’t need to make any contributions to it! This ensures that your family will be taken care of if you die.
Pension For Life
Remember that you and your employer will contribute to the EPF. While the employer will contribute 12%, some of that money will be deposited into the Employees’ Pension Scheme. This will be very beneficial for you in the future. As long as you’re able to maintain your membership for ten years, you will receive a lifelong pension as outlined in the Employees’ Pension Scheme of 1995. Suffice to say, it wise for every salaried worker to take advantage of an EPF.
There are plenty of ways to invest your money. However, the returns from some methods are going to be dismal. The good news is that the EPF returns can be better. Many EPFOs are going to invest their money into exchange-traded funds. This can increase your returns by a lot. Ultimately, you’ll receive much better returns from your EPFs than you would with the alternatives. If you want to ensure that you’re going to be able to generate income in the future, the EPF is the best option for you.
Generally, it is not a good idea to withdraw your money early. Nevertheless, anything can go wrong. Therefore, you just never know when you’re going to need money. Well, you can overcome the problems you’re facing by using the company in your provident fund. As long as you’ve maintained the account for 5 or 10 years, you should be able to make a premature withdrawal. However, you must use the money for specific purposes. For instance, you can use the money for medical treatment, unemployment, or home loan repayment. While there are some stipulations, it is great knowing you have the money there in case you need it.