EPF vs PRS?
PRS is similar to the Employees Provident Fund (EPF) because it is a retirement scheme. As with EPF, PRS contributions are also divided into 70 subdivisions into two sub accounts: Sub-Account A and Sub-Account B. Only when retirement age 55, or in the event of death or emigration, can be withdrawn from PRS account. Pre-retirement withdrawal can only be made from Sub-Account B, subject to a tax penalty of 8%.
There are some key differences between EPF and PRS. For starters, PRS is a voluntary contribution scheme where you can donate as little or as much as you want. Secondly, PRS is operated privately by a guaranteed unsecured financial institution, unlike the state-owned EPF which guarantees a minimum dividend rate of 2.5% a year.
You also need to choose the listed PRS provider and the matching funds you wish to donate. You can spread your contribution among more than one fund. Each fund has different risk levels and similar returns, so you need to do some market research before making your choice. Alternatively, you may be assigned a default option based on your age group.
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