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The government has implemented the EPF Scheme 2026, replacing the Employees' Provident Fund (EPF) scheme that had been in effect since 1952. However, with the introduction of the new scheme, many employees are wondering if they will now have to contribute more to their PF than before. The answer is no. There have been no major changes to the mandatory contribution rules under the new scheme; both employees and employers will continue to contribute according to the established norms. The option for additional savings through the Voluntary Provident Fund (VPF) remains available as before.

What is the difference between EPF and VPF?
EPF is a mandatory retirement savings scheme for salaried employees, requiring contributions from both the employee and the employer. On the other hand, VPF (Voluntary Provident Fund) is an optional facility. Under VPF, EPF members can voluntarily deposit an amount exceeding the mandatory contribution into their PF account, helping to build a larger corpus for retirement.

What will the EPF contribution be?
Under the EPF Scheme 2026, both the employee and the employer will continue to contribute 12% of the basic salary and dearness allowance (Basic + DA) to the EPF, just as before. Currently, the government has not altered the wage ceiling; therefore, the existing limit of ₹15,000 per month remains in effect until a new notification is issued.

If an employee's salary exceeds ₹15,000, the EPF contribution is generally calculated based on this fixed limit. However, if both the employee and the employer agree, contributions can be made based on the actual basic salary.

Additional funds can be deposited in VPF.
The new scheme continues to offer employees the facility to save extra money through VPF. Employees can voluntarily deposit amounts exceeding the mandatory EPF contribution into the VPF. A key benefit is that VPF deposits earn the same rate of interest as EPF deposits.

However, the employer doesn't need to match the additional contribution made by the employee to the VPF. A company can make additional contributions only if it chooses to do so.

VPF contributions can be reduced or even stopped if needed.
A key feature of the new system is that employees can reduce or completely stop their VPF contributions in the future. Similarly, if an employer is voluntarily making additional contributions, they too can reduce or discontinue them in accordance with the rules.

Which option is better for retirement planning?
Financial experts believe that EPF forms a solid retirement foundation for every salaried employee, as it involves contributions from both the employee and the employer. Meanwhile, VPF can be a good option for employees who have a regular income and wish to build a substantial retirement fund for the future. It offers the same interest rate as EPF and provides an opportunity for additional savings. Therefore, one should consider their income, expenses, and future financial needs when choosing between EPF and VPF.

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