Provident Fund

Provident fund is a type of investment fund that is often established to save for long-term objectives like retirement. There are several provident fund plans available in Kenya for people with different types of jobs, including self-employed people, people working in the private sector, and people employed by the government.

2 Best types of provident fund

The Statutory Provident Fund

The Statutory Provident Fund was established by the Provident Funds Act of 1925 and is also referred to as the General Provident Fund (GPF). It is primarily designed for people who work for organizations like the government, accredited colleges and universities, the railroads, and other similarly designated ones.

Official Provident Fund

Employees of private companies with more than 20 employees are eligible for this sort of provident fund. Here, businesses and establishments have two options: either they create their own PF trusts on their own or they join an already-existing program that has received official approval.

The  basic Provident fund rules

The Trust is in charge of collecting monthly contributions from both employers and employees and investing those funds in a variety of legal securities and investment plans.

The Workers’ Contributory Provident Fund is established by the employer in the form of an irrevocable trust with a name reflecting the company’s name. The trust deed names at least three to five trustees who are selected to oversee the trust. The Provident Fund Trust Regulations were individually prepared / drafted. The stamp paper is used to write the trust deed. The terms and circumstances pertaining to the obligations, responsibilities, rights, and liabilities of the business, its workers, trustees, auditors, bankers, actuaries, etc., are outlined in the trust deed and the rules.

The Best 4 Benefits of Provident Funds

The advantages of the  program are listed below:

• Long-term financial planning is facilitated by it.
• There is no necessity to invest all at once in one large sum. The employee’s compensation is deducted on a monthly basis, which over a lengthy period of time allows for significant savings.
• In an emergency, it may provide cash assistance to a worker.
• It enables financial planning for retirement and aids in keeping a decent standard of living.