Provident Fund vs Pension Fund

Provident Funds vs. Pension Funds Provident funds are funds set up by employers to which employers and employees pay a fixed percentage of their base salary each month. A pension fund, on the other hand, is a fund set up by an employer to which the employer pays a fixed percentage of an employee’s salary each month.

Employees are now considered company assets as they are responsible for the company’s performance and market position. The success or failure of a business rests on the shoulders of its employees. Employers have many benefits for retaining efficient and hardworking employees in the long term. One such system is to give pensions and retirement benefits so that they do not have to struggle in old age. Here we are talking about provident funds and pension funds.

Definition of Provident Fund

Saving means preparing for the future, and funding refers to the amount of money set aside for a specific purpose. The term retirement fund (PK) is understood to mean keeping a certain amount of money available for retirement. A certain amount is deducted from the employee’s salary and transferred to the fund in the form of contributions. employer too

  • Statutory Provident Fund (SPF): Statutory Provident Fund applies to the persons who are in employment with the government, university, etc., whether it is central, state or local self. The amount received is fully exempt from tax.
  • Recognized Provident Fund (RPF): This applies to the establishment which employs 20 or more persons. The Fund is recognized by the Commissioner of income tax. The amount received on maturity will be free from tax only if:
    • The employee served for more than five years.
    • The employee served for less than five years and the reason for termination is due to ill-health or employer’s business ceases to exist etc.
  • Unrecognized Provident Fund (URPF): Unrecognized Provident Fund is a fund started by the employer and employees of the organization, but not recognized by the Commissioner of Income Tax. Leaving employee’s contribution, the rest of the amount is taxable as income from salary.
  • Public Provident Fund (PPF): This is a provident fund scheme for the self-employed person, in which they can make a contribution of Rs 500 to Rs. 150000 per year. The amount received and contributed is fully exempt from tax.

Pension Fund

Simply put, the term pension means a regular payment to an employee by the state or other employer for services rendered in the past due to pensions, retirement benefits, disability, etc.

The fund is financed by transferring a portion of the employer’s contributions to the employee provident fund to the pension fund. H. If the employer pays her 12% to the provident fund, 3.67% will be paid to the provident fund and the rest will be diverted to the pension fund. The central government will also contribute her 1.16% of the employee’s salary to the pension fund if certain conditions are met.

On the retirement of the employee, he will get periodic payments of a specified sum such pension is known as uncommuted pension which. However, the employee can also opt for commuted pension whereby he can get the entire or part amount in a lump sum.

Key Differences Between Provident Fund and Pension Fund

The following are the major differences between provident fund and pension fund:

  1. Provident Fund is a kind of fund in which employer and employee make a contribution during the service of the employee to provide for future benefits. Pension Fund, on the other hand, is also a fund in which employer contributes a specified sum to provide retirement benefits to the employee as a consideration for his past services.
  2. In provident fund, both employer and employee contribute to the fund, but in the case of pension fund employer and central government contribute to the fund.
  3. Provident Fund works under the Employee Provident Fund Scheme, 1952 whereas Pension Fund works under Employees Pension Fund Scheme,  1995.
  4. The amount received by an employee in Provident Fund is in a lump sum. Conversely, it is up to the employee whether he wants to commute his pension or not in the case of the pension fund.
  5. In Provident fund, the amount received is an aggregate of the contribution made by both the parties and interest thereon. In contrast to the pension fund, the basis of pension is an average of 12 month’s last drawn salary and period of service.

Provident Fund and Pension Fund are two schemes of government, in which an employee can get consideration for his services rendered by him for years. An employee can withdraw the whole or part of an amount in the provident fund when he needs it, like the construction of the house, illness, marriage or education, etc. However, the only one-third amount can be withdrawn in case of the pension fund.

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Complete Guide to NSFAS Online Loan Application for South African Students (2025)

If you are a South African student looking to pursue higher education but are facing financial difficulties, the National Student Financial Aid Scheme (NSFAS) is one of the most accessible funding options available. NSFAS provides financial aid in the form of bursaries and loans to qualifying students at public universities and TVET colleges in South Africa.

This guide will walk you through everything you need to know about the NSFAS loan application process, from eligibility requirements to application steps and frequently asked questions.


📌 What is NSFAS?

The National Student Financial Aid Scheme (NSFAS) is a government-funded financial aid scheme aimed at helping students from low- and middle-income households to access tertiary education without the burden of upfront fees.

NSFAS offers both bursaries and income-contingent loans:

  • Bursaries: For eligible students who meet academic and household income criteria (especially for TVET and university students).
  • Loans: For students who do not meet all bursary criteria or who are pursuing postgraduate qualifications not funded under bursary schemes.

✅ Who Qualifies for an NSFAS Loan?

To qualify for an NSFAS loan (especially for postgraduate students or programs not funded under the bursary system), you must:

  • Be a South African citizen.
  • Be financially needy, with a household income of less than R350,000 per year.
  • Have a valid South African ID.
  • Be enrolled or accepted to study at a public university or TVET college.
  • Not be funded through another bursary program that covers all expenses.
  • Maintain satisfactory academic progress (returning students).

📚 Courses Funded by NSFAS

NSFAS primarily funds undergraduate qualifications, but certain postgraduate programs (e.g., PGCE, postgraduate diplomas in education, and professional courses like LLB) may be considered under the NSFAS loan scheme, not bursaries.

If you’re studying:

  • Undergraduate degree or diploma: You are likely eligible for a full NSFAS bursary.
  • Postgraduate study: You may qualify for a loan, depending on the course and funding availability.

📄 Required Documents for NSFAS Application

When applying, make sure you have the following documents scanned and ready:

  1. Certified copy of your South African ID or Smart Card.
  2. Parent(s) or guardian(s) ID documents.
  3. Proof of income (latest payslips, UIF, or affidavit if unemployed).
  4. Consent Form signed by your parent(s)/guardian(s) to allow NSFAS to verify income.
  5. Proof of registration or acceptance at a public institution.
  6. Academic transcripts (for continuing or postgraduate students).

🖥️ How to Apply for an NSFAS Loan Online

Step-by-Step NSFAS Online Application Process (2025)

  1. Visit the NSFAS Website

    Go to: https://www.nsfas.org.za

  2. Create an Account

    • Click on “MyNSFAS” and register your profile.
    • You’ll need a valid email address and South African cellphone number.
    • Choose a strong password and verify your account via email or SMS.
  3. Login and Start the Application

    • After registration, log in to your MyNSFAS account.
    • Click on “Apply” to begin a new application.
  4. Fill in Your Personal Details

    • Input your ID number, name, surname, and other details exactly as they appear on your ID.
    • Provide household income information and living arrangements.
  5. Upload Required Documents

    • Upload all supporting documents in PDF or JPEG format.
    • Each document must be clear and under the size limit specified.
  6. Submit Your Application

    • Review your application for accuracy.
    • Click “Submit” and wait for a confirmation message.
  7. Track Your Application

    • Log in regularly to check your application status.
    • You will be notified via SMS and email at each stage of the process.

🗓️ Important NSFAS Dates (2025)

  • Application Opening Date: September 1, 2025
  • Application Deadline: January 31, 2026
  • Appeals Period: February 2026 (if rejected)
  • Disbursement: After registration and approval

Note: Dates are subject to change; always confirm on the official NSFAS website.


💸 What Does the NSFAS Loan Cover?

NSFAS funding typically includes:

  • Tuition fees
  • Registration fees
  • Accommodation (if living away from home)
  • Meals and transport
  • Learning materials (e.g., textbooks)

For loans, repayment is only required once you start working and earn above a threshold (around R30,000 annually, but subject to change).


🔄 NSFAS Loan Repayment

Repayments are:

  • Income-contingent – you only repay when you can afford to.
  • Administered by DHET (Department of Higher Education and Training).
  • Interest-bearing, but interest rates are low and favorable.

You can also apply for a partial loan conversion to a bursary if you perform well academically.


🔁 How to Appeal a Rejected NSFAS Application

If your application is rejected, you may submit an appeal via your MyNSFAS portal:

  1. Log into your MyNSFAS account.
  2. Click on “Track Funding Progress”.
  3. If rejected, click on “Submit Appeal”.
  4. Upload any missing or corrected documents.
  5. Provide a clear explanation or motivation.

📱 NSFAS Contact Information


📝 Final Tips Before Applying

  • Apply early to avoid system overload near the deadline.
  • Use your own email and cellphone number (do not use someone else’s).
  • Double-check that all your documents are certified and legible.
  • Keep a copy of your submission confirmation for reference.

By following this guide, you can confidently apply for NSFAS funding and move one step closer to achieving your academic and career dreams—without the burden of immediate financial pressure.