Funny how such a big organisation like the PF authorities do not need to do any mark to market but are ocassionally given some higher (tax free) interest credits. The other advantage is interest once credited, it cannot be taken back.

If you have money put more in VPF has been my call (for those who like debt, I do not). Politically they will NEVER PAY LESS IN VPF than PPF – and if you have an accumulation of Rs. 50Lakhs in VPF, 1.5% is not a small amount, is it?

So if you are lucky and have a VPF, like debt and you are about 40 years of age, put more in VPF. During this year REDUCE your PPF contribution to Rs. 1000 AND pump up your VPF.

a short an intervention..thanks.

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  1. perverse incentives for indian organized workers.its strange how the suddenly discovered this money hidden somewhere. either it is a black hole and an UTI waiting to happen or it is plain US style social security ponzi scheme just lucky because india will have more organized workforce joining than retirees withdrawing.

    all this inter generational trickery will definitely cause more friction between younger and older people -not today,but in the future

  2. One point which I read in yesterday’s newspaper (mint) is, all accounts which have been defunct for 3 years now will not receive any interest credit beginning April 11.

    Imagine a situation where people have changed jobs but haven’t transferred their PF’s yet. (The fact that, the transfer process is a real black box is a different story!)

    It’s grossly unfair to them isn’t it ??


  3. Many companies manage their own trusts and have to fork out money for the PF interests govt declares. They do not earn enough based on the allocations to various investment opportunities approved by the govt.
    The private companies do not allow % contribution to be increased as each year they have to subsidise the PF members.
    I see PF & PPF as the best debt investment available today. Good interest tax free (for now.)

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