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  •  What is provident fund?
              Provident fund ("the fund") is a fund set up voluntarily between the employer and employees. Assets of the fund consist of money contributed by both employer and employees, which means, not only employees save for their retirement, employer also helps them adding to the fund. The contribution to be made by employer shall always equal the rate of the employee’s savings or higher. Therefore, setting up of a provident fund can be regarded as a kind of benefit so as to motivate employees to work with the employer.

              Provident fund not only provides a tool for employees to save concurrently with the employer’s assistance, assets of the fund are further managed by a professional fund management called "Asset Management Company (AMC)." The benefits derived from management are distributed to members of the fund proportionately. 

              Member’s savings could grow over time on account of the monthly contributions from both employer and employee, plus assets derived from investments or interests incurred from assets of the fund. However, interests and dividends from investments will not be paid to fund members before membership termination since the purpose of setting up the fund is to accumulate the savings into a large amount with the intention to assure a quality life after retirement. Moreover, members are not entitled to withdraw part of the savings before termination of membership since it is not consistent with the objective of saving for retirement. 

            Upon termination of membership, members will receive all of their savings and its incurred benefits, as well as a certain amount of employer's contribution and its incurred benefits according to the fund’s articles. 

            In case of resignation, member can choose to temporarily keep their money within the former fund before transferring it to the provident fund of his/her new employer. This will allow members to seamlessly maintain their retirement savings in the provident fund system. As a result, members will have enough savings when they reach retirement age and have a good quality of life after retirement.

            Besides, money received from a provident fund upon retirement is tax exempted.

last updated date 13/05/2553

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