Gratuity fund and provident funds are refer to the retirement benefits. But most of the employees have not clear understanding of both these terms Gratuity and Provident fund. Gratuity fund refers to the part of the salary or a sum of money that is receive by an employee from his/her employer for the service pay by the employee to the company. It is pay to the employee when an employee completes five year full-time services with the employer or more than five years. Gratuity also called the retirement benefit plan offered to the employee at the time of retirement or leaving a job. It is payable once when the employee leaves the organization (retirement, resignation or death). You can find the further Difference Between Gratuity And Provident Fund in Pakistan in the below-listed headings.
Provident fund is refer to the retirement savings scheme managed by the Government. Workers or an employee contributes some portion of their salaries to provident fund and employers must contribute half of their employees so that the money in the fund is then pay out to the retirees of the company or an organization. The basic and the main purpose of Provident Fund is to provide financial support to those employees who have to compete for the retirement age plan of a company or an organization. Provident fund is pay on lump sum amount to the retirees. Further Difference Between Gratuity And Provident Fund in Pakistan is discuss below
Difference Between Gratuity And Provident Fund in Pakistan
Key Difference between Gratuity and Provident Fund in Pakistan:
Some of the key points surely clear the difference between Gratuity and Provident Fund easily.
- Gratuity is social security benefit provided to the employer on the base of his/her good serving or in case of death or after their retirement. Whereas Provident Fund is a kind of fund in which both employer and employee make some contributions for the sake of future benefits.
- The Gratuity fund is offer only in private sector employment whereas the Provident fund is manage by the government sector.
- Gratuity fund is only give to the employees who have complete 5 years with the same organization. Whereas for Provident fund minimum 10 years of service is required.
- In gratuity, fund contribution is made only from employer whereas in provident fund both employer and employee contributions.
- Gratuity refers to a gift to employees after successful completion of five years of rendering service. Whereas Provident fund a retirement plan managed by the government.