A provident fund is an investment fund that an employer and employees voluntarily establish to serve as long-term savings to support an employee's retirement.
Sources of funds:
Employee's contribution: The amount deducted from the employee's salary at 2% – 15%.
Employer's contribution: Besides the regular salary payment made to the employer, an employer will also pay 2% - 15% of the employee's salary into the fund. It is also considered a part of employment welfare.
An investment management company will manage funds placed in a provident fund by a specified investment policy to maximize the financial returns, given the acceptable risk level.
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