Based on the performance of the investment portfolio, returns are credited to members’ account annually. The annual returns credited to members’ account forms part of members fund and therefore, members earns benefit equivalent to compound interest on their contribution. For example, if a member has an accumulated balance of Nu. 100 in your provident fund account and NPPF credits an annual return of 8% during the year, the following year, the member will get return on Nu. 108 (Nu. 100 + Nu 8). Therefore, effectively, all members have the benefit of earning compounding rate of returns on their contribution, which are not available in normal banking products.
The following is a graphical representation of performance of investment, returns declared and the inflation rate in the economy.