I invest Rs 1 lakh each in EPF and VPF. Should I also consider opening a PPF account?

I already have an EPF with my employer company and contribute around Rs. 1 lakh annually. Apart from that, I am also contributing another Rs.1 lakh through VPF (Voluntary Provident Fund). Should I also consider opening a Public Provident Fund account? Please guide me. Will I breach the limit of Rs.2.5 lakh for contribution to Provident Fund accounts?  

Akash Aneja 

Rajiv Bajaj, Chairman & MD, BajajCapital 

We extend our heartfelt compliments to you for proactively planning for your retirement by making an additional contribution through the Voluntary Provident Fund (VPF). Your dedication to securing your financial future is truly commendable. 

In conjunction with your Employee Provident Fund (EPF) and VPF, we strongly recommend opening a Public Provident Fund (PPF) account. This suggestion is made with a profound reason in mind. Your EPF and VPF remain active until the age of 60, which coincides with your working tenure at the company. Upon reaching this milestone, the balance from your EPF, including VPF, will be disbursed to you. 

However, by establishing a PPF account, you gain the advantage of maintaining it well beyond the age of 60, even throughout your lifetime. The beauty of a PPF account lies in the absence of any upper age limit for extensions, allowing you to keep it active long after the initial 15 years have passed. 

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Furthermore, it's important to note that your contributions to the PPF account will not breach the limit of Rs. 2.5 lakh. The rule regarding taxing the interest on excess amounts beyond Rs. 2.5 lakh applies exclusively to EPF (including VPF) and does not extend to the PPF. 

Incorporating a PPF account into your retirement savings strategy offers long-term security, financial flexibility, and peace of mind. We highly recommend considering this valuable addition to your portfolio. 

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)