What is Provident Fund?
Provident fund is a fund set up voluntarily between the employer and employees to serve as a security for the employees in case of their resignation, retirement, disability, or provide collateral to their families financially cope with their future if the employee dies.
A provident fund established under the act has a juristic person status which is separate from the employer’s juristic person. A management company undertakes to control and manage the fund by a group of committee members who are appointed through election. The registrar as prescribed by law is The Securities and Exchange Commission (SEC). The SEC also monitors performance of the management companies in charge of provident funds.
In addition, the custodian is a third party that the law provides that the fund must provide a custodian separate from the management company. To maintain the assets of the fund. To prevent the management company to take the assets of the fund to cause damage.