Provident Funds​​​​

Provident Funds​​​​

Linked Slide

What is a provident fund?

A provident fund is a fund voluntarily established by employees and their employers, comprising contributions of employees who are the provident fund’s members along with the contribution of the employer. The objective of a provident fund is to provide a guarantee to its members and their families in case of members’ resignation, retirement, disability or death. A provident fund consists of four components, i.e.,

The employee’s contribution to the fund by deduction from the employee’s monthly salary.

Benefits that come from investment of employee contribution

The employer’s contribution to the fund for the employee who is the fund’s member, in accordance with the fund’s regulations.

Benefits that come from investment of employer contribution

Benefits for employers

  • Boost employee loyalty which will in turn enhance work efficiency and reduce employee turnover
  • Reduce employer’s burden in managing retirement allowance while earn more tax benefit
  • Build the organization’s image

Benefits for employees

  • Receive extra income from the employer.
  • Encourage retirement savings among employees to provide future security of the employees and their families after resignation, disabilities or death
  • Earn more benefits from tax saving and return from investment

Types of Provident Funds

Single Fund

A large-sized fund established by the sole employer, with specific regulations and investment policy. This type of fund is suitable for organizations having considerable start up funds.

Master Pooled Fund

A fund established by many employers, with common key regulations and investment policy. Each employer may determine specific criteria for their provident fund in the part of specific fund regulations. This type of fund is suitable for organizations that first set up the provident fund. There is no limitation for the number of members or the start up fund size.

Services before establishment of a provident fund

  1. Provide advice on the fund’s establishment and preparation of important documents for registration. An appropriate operational plan is devised for the company setting up the provident fund.
  2. Give recommendations on the fund’s regulations, which must be in line with laws, objectives and needs of employees and their employer.
  3. Prepare documents and arrange for registration of the fund with the registrar.
  4. Prepare documents to provide relevant knowledge to employees of the company setting up the fund before they can apply for the fund, free of charge.

Services after establishment of the provident fund

  1. The fund will be efficiently managed by investment professionals.
  2. The fund’s accounting is prepared.
  3. The fund’s status and performance reports are prepared for submission to the fund’s committee on a monthly/yearly basis.
  4. Individual statement of provident fund account is prepared every six months to inform the fund’s members of the fund’s status and performance, based on change of NAV per unit.
  5. Make payment to the fund’s member or beneficiary within 30 days of their exit from the fund.
  6. rovide news and information that is beneficial to the fund’s committee and members.

Establishment of the provident fund

Set up a provident fund with KAsset