New Delhi, March 13 -- Mr. A is a risk-averse investor who prefers fixed over market-linked returns. He contributes 12% of his basic salary to the employee provident fund (EPF). The concept of voluntary contribution over and above 12% of basic pay, known as the voluntary provident fund (VPF), appealed to him as it earns the same interest as the EPF. He started investing a good amount of surplus in it in 2019.

He was told he could withdraw the VPF anytime after a five-year lock-in period. Fast-forward to 2025, and he needed to withdraw funds to purchase a flat. To his surprise, there was no separate VPF accounting in his account. He could only see his EPF balance, and withdrawals, too, had limitations.

"It is a misconception that the VPF...