Employee Provident Fund

Introduced by the EPFO (Employee Provident Fund Organization) the Employees’ Provident Fund Scheme is a popular savings scheme catered towards the financial well-being of the job oriented working class. The primary objective of this scheme is to help employees save and build a retirement corpus. This scheme is directed by three different acts. These are:

  • Employees’ Provident Fund Scheme Act, 1952
  • The Employees’ Deposit Linked Insurance Scheme Act, 1976
  • Employees’ Pension Scheme Act, 1995

For the EPF scheme to work, both employer and employee contribute 12% of the employee’s salary on a monthly basis. The plus point is that the accrued interest on the EPF is tax-free. This means that while withdrawing the EPF amount, you will not be required to pay any kind of tax. Employees can avail these services by accessing the official portal of the EPF.

Examples :

For example, let us assume you pay Rs. 5,000 per month as a part of your salary towards the EPF scheme. Your employer will match it with another Rs. 5,000 per month. The combined amount i.e. Rs. 10,000 is then deposited with EPFO. You will get 8.5% (current rate of interest in EPF scheme) every year on this amount deposited with EPFO. This interest rate may change as EPFO decides on it once every financial year.

The contribution by the employee is equally matched by the employer. So that’s another 12%. Therefore, a total of 24% of your basic salary goes to the scheme. However, the entire 24% does not go towards the first part of EPF (i.e. the wealth generation part where your retirement benefits are accumulated.)

EPFO: The Organization Behind Building and Managing EPF

A non-constitutional body, the Employees’ Provident Fund Organization is looked after and managed by the Ministry of Labour and Employment. It was established in 1951. The EPF scheme covers Indian as well as international workers across multiple countries with whom the EPFO has signed bilateral agreements.

Some important services offered by the EPFO are as follows:

  • Online withdrawal of EPF : Employees can easily withdraw their EPF amount through the UAN number. To withdraw the amount, the user must ensure that their Aadhaar and Bank details have been linked with UAN.
  • International workers can generate a Certificate of Coverage : Are you an international worker? For such people who are working in countries and who have social security agreements with India are eligible to access a Certificate of Coverage (CoC). This will help them take advantage of the EPF scheme.
  • UMANG App : Needless to say that the UMANG app is a lifesaver for people availing the EPF scheme. Keeping in mind the digital-led India, the UMANG app offers various services to the users right from viewing their EPF passbook to updating their specific profile details.
  • Online transfer of EPF : UAN enables the person to transfer the EPF amount from the employee’s previous Member ID to the current one. The best part is that this process is hassle-free, paperless and very simple.
  • Missed call and SMS service : Users who have activated their UAN can access their PF balance and other important details. All they need to do is send an SMS (Here’s how: EPFOHO UAN) to 7738299899 or either they can give a missed call to 011-22901406.
  • Claim EPF and know its status : Through the UMANG app, the EPFO members will be able to check the status of their claim and also download the EPF passbook with the help of UAN.

Main Objectives of the EPFO:

  • To make sure that every employee has only one EPF account.
  • Ensuring that all the rules and regulations set up by the EPFO are being followed on a regular basis.
  • To ensure that all the members are able to access their accounts without hassle.
  • To make sure that any and every claim settlement doesn’t take more than 3 days.

Universal Account Number (UAN) :

Basically, UAN is a 12-digit number given to every member who comes under the EPF scheme. There is no change in this number even after the person switches his or her job. However, an employee must ensure to activate their UAN numbers in order to avail the services online.

Understanding EPF Benefits :

EPF scheme offers various benefits to employees. Let’s have a look at some of them!

  • It’s a great option when it comes to saving money, especially in the long run.
  • As deductions are made on a monthly basis, there is no need to invest a lump-sum amount.
  • During a time of crisis or any emergency, the amount in your EPF account is of immense help.
  • At the time of retirement, this corpus can help you live an active lifestyle while not bothering much about the finances, even when you are not working anymore.

What is the Eligibility for EPF?

The eligibility criteria in order to join the EPF scheme are mentioned below:

  • It is mandatory for salaried employees who have a monthly income of less than Rs.15,000 to register for an EPF account.
  • As per law, for organizations that have more than 20 employees, it is mandatory to have an EPF scheme in place.
  • Organizations that are operating with less than 20 employees can also join the EPF scheme on a voluntary basis.
  • Except for Jammu and Kashmir, the whole of India can benefit from the provisions in the EPF scheme.

Checking EPF Balance :

In total there are four methods by which you can check the balance maintained in your EPF account.

  • Using the EPFO portal : It is very easy to check the EPF balance through the EPFO portal. All you need to do is log in using your UAN and password and check your balance.
  • Using the UMANG app : Download this app via the play store or app store and check your EPF balance.
  • Using a missed call service :Give a missed call at 011-22901406 from your registered mobile number.
  • Using an SMS service :Send a text message to 7738299899 and easily check your EPF balance.

Withdrawing EPF Amount Online :

You can partially withdraw from your EPF account. However, the amount of money you can withdraw will depend upon the reason for withdrawal. The entire PF amount can also be withdrawn however, it would totally be depending upon the circumstances. Some of these situations include your getting retired or resigning from your job due to permanent body capacity or damage.

Frequently Asked Questions

  • Can my employer reduce the share towards the total EPF contribution?
    No, your employer cannot do that.
  • How is EPF contribution calculated if the employee is paid on a daily or partial basis?
    It would be calculated according to their salary.
  • Can an employee still contribute towards EPF after he or she quits the job?
    No, it is not possible for an employee to do that.
  • Is there any age restriction for an employee to become a member of EPF?
    No, there is no age bar for the same.
  • Is it possible for an employee to opt-out of EPF?
    No, if you are an eligible member, you cannot opt out of EPF.