what is a provident fund 
a provident fund is a government managed retirement savings scheme used primarily in asia and africa 1 in some ways these funds resemble a hybrid of 401 k plans and social security in the u s they also share some traits with pension funds workers give a portion of their salaries to the provident fund employers also contribute on behalf of their employees contributions may be compulsory the money in the fund is held and managed by the government and eventually withdrawn by retirees or in certain cases their surviving families in some cases the fund also pays out to people who cannot work due to disability investopedia michela buttignolcontributions and withdrawalseach national provident fund sets its own minimum and maximum contribution levels for workers and employers minimum contributions can vary depending on a worker s age some funds allow individuals to contribute extra to their benefit accounts and for employers to also do so to further benefit their workers governments set the age limit at which penalty free withdrawals are allowed to begin some pre retirement withdrawals may be allowed under special circumstances such as medical emergencies additionally in south africa provident fund payouts can be claimed at any age if the person has been a non resident for three uninterrupted years 2in many countries those who work past the minimum retirement age may face restricted withdrawals until full retirement if a worker dies before receiving benefits the surviving spouse and children may be able to receive survivors benefits provident funds differ from another state owned vehicle the sovereign wealth fund provident fund vs social security vs 401 k as is the case with social security in the u s the money in provident funds is held by the government not by private financial institutions meanwhile social security benefits are paid with taxes via two trust funds the old age and survivors insurance trust fund and the disability insurance trust fund in the u s department of the treasury 34 in 2023 the estimated effective interest rate earned by the two trust funds combined was 2 4 5