Introduction to Contribution Schemes of Provident Fund
The contribution schemes of provident fund consist of:
1. Joint provident fund scheme: The scheme is set up voluntarily by the employer which can be joined voluntarily by the employee (Note 1, 2). Please click here for the steps to set up and participate in the joint provident fund scheme
2. Individual provident fund scheme: The scheme is set up and participated voluntarily by the individual account owner of the non-mandatory central provident fund. Please click here for the steps to set up an individual provident fund scheme
In terms of the right to choose the fund management entity (Note 3) and pension fund in the contribution schemes of the provident fund, there are different requirements for the right of choice for different contribution schemes.
Joint provident fund scheme
The fund management entity is chosen by the employer. The employer and employee choose a suitable pension fund and investment allocation for their respective contributions.
Individual provident fund scheme
The contributor of individual scheme has complete discretion.
(Note)
(1) Under Law 7/2008, Labour Relations Law, “employer” means any natural or legal person, or association without legal personality, or special committee that, on the basis of a contract, has the power to exercise authority and direction over the employee and pays the latter remuneration for the work performed;
(2) Staff members of public sector cannot participate in the joint provident fund scheme, but they can still participate in the individual provident fund scheme;
(3) The “fund management entity” is an entity which has already received the permission given under paragraph 1 of Article 5 of Decree-Law 6/99/M of February 8 and is also permitted to register in accordance with the provisions of this Law, one or more of its managed pension funds under the non-mandatory central provident fund.