EPF Balance: EPF stands for Employees’ Provident Fund. It is a massive fund of assets worth USD 128 billion and is one of the biggest social security schemes offered by a government body, in the world. The Employees Provident Fund Organisation or EPHO is an organization controlled by the Ministry of Labour and Employment, Government of India.
The Employees’ Provident Fund Organisation administers 3 different types of social security schemes where enrolment is compulsory for every person working in the organized sector. These three types are Employees’ Provident Fund, which deals with compulsory savings meant for a secured future after the retirement of the employees or their nominees in case of death.
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Employees’ Pension Fund Scheme, which is a monthly amount is credited to a retired employee or to his/her nominee and Deposit Linked Insurance Scheme where the employee is covered by an amount thirty times his basic pay (basic + DA) in the case of his untimely demise during employment. All of the relevant topics will be covered in details in this article.
The Employees’ Provident Fund Organisation was formed by the provisions of The Employee’s Provident Fund and Miscellaneous Provisions Act, 1952. It came into full force on 1st November 1952. It is managed by the Central Board of Trustees which formed by the provisions of the same act.
Different Schemes of the Employees Provident Fund Organisation
Employees’ Provident Fund Scheme: The EPF is a compulsory savings scheme offered by the Employees’ Provident Fund Organisation where every person engaged in employment in the organized sector is mandated to contribute 12% of his basic pay towards Employees Provident Fund. The employer also contributes 12%, and this fund is created with the aim to provide an employee with a secured future after their retirement. The employer is mandated to contribute 8.33% towards Employees’ Pension Fund and 3.67% towards Employees’ Provident Fund. The amount collected under the employee’s fund is tax-free unless withdrawn before 5 years of total service period across different organizations. This fund also earns interest at the rate of 8.65%. If there is a dormant period of more than 2 years, then the amount does not earn interest and can be partially withdrawn even before retirement.
Employees’ Pension Fund Scheme: The EPS is a scheme where the employee is automatically enrolled upon signing up for Employees’ Provident Fund. The employer is the main contributor to this fund, and the 8.67% of basic pay of the employee gets deposited in this fund. The central government is the other contributor to this fund, and they contribute 1.16% of the employee’s basic pay. This fund does not earn any interest; however, the minimum service period needs to be 10 years to avail the benefits of Employees’ Pension Fund. This scheme is aimed at providing a monthly pension to every salaried individual employed in the organized The EPS provides lifelong pension to the employee and to the employee’s spouse and two children if the employee passes away. Recently the government has increased the pension amount to INR 1000 per month from INR 500.
Employees’ Deposit Linked Insurance Scheme: EDLI is a free life insurance benefit that is provided to all employees working in the organized The employee gets enrolled for EDLI automatically when getting enrolled for EPF. The employee does not make any contributions as there is no such fund created. The employer contributes 0.50% of employee’s basic pay towards the premium of EDLI scheme. This is a scheme where if the employee passes away while in active service then the employer must pay thirty times the employee’s basic pay to the employee’s nominated beneficiary. There are certain scenarios where the EDLI amount appears to be too low. In those cases, the employer has the option to approach a private or national insurance provider to arrange for better insurance cover for its employees. The EDLI cover applies worldwide and 24 hours a day without any exclusion.
Employees’ Provident Fund Organisation Employee and Employer Services
The EPFO offers varieties of services for the employee as well as employers. It manages the funds of an employee and acts as a service provider of all beneficiaries across the country. EPFO is responsible for securing the future of millions of employees engaged in the organized sector post their retirement and/or after their demise. EPFO enables the employee to keep track of their EPF balance.
Employee Services: The EPFO manages the fund of all employees through a Universal Account Number (UAN). UAN was launched by the Prime Minister of India Narendra Modi on 1st march 2014. The aim of UAN is to act as an umbrella for all the different Provident Fund accounts of a person. It was observed that as a person changes organizations in the organized sector, a new PF account was being created every time. The EPFO has a huge trouble managing and consolidating all these accounts. Adding to it were issues related to accounting transfer and EPF balance transfer from old account to new account. With the introduction of UAN, it is become very easy for the EPFO to manage employee accounts. The employee can also check the details of all his PF accounts now consolidated under a single UAN. Additionally, employees can submit and update documents regarding their Proof of Identity and Proof of Address. The EPFO also provides facility to check and print passbooks and transfer funds from their old PF account newer accounts. Detailed information about claim submitting procedures are available, and an employee can download claim forms and are allowed to submit them at the nearest PF office.
Employer Services: The EPFO allows employers to easily transfer their own and the employee’s contributions from their linked bank accounts. It also facilitates them to update employee details and their KYC documents. Government schemes like Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) can be accessed from the newly launched employer’s portal where an employer is encouraged to generate more employment in its organization while the government offers to pay the employer’s share of EPS for the employee as an incentive. This scheme enables an employer to create more jobs in its establishment and helps fight the problem of joblessness in India. The EPFO also enables the employer to file ECR online.
New Withdrawal Rules by Employees Provident Fund Organisation:
As of 2016 the Ministry of Labour and Employment, Government of India introduced new PF withdrawal rules to facilitate early withdrawals. These are a part of amendments made to the Employees Provident Fund Scheme, 1952.The following are the changes:
- The members are encouraged to keep their EPF balance untouched and not immediately withdraw it after resigning from an organization and rather transfer it if they continue with employment later on.
- The EPF balance amount cannot be fully withdrawn before attaining the retirement age of 58 years.
- The Provident Fund can now be withdrawn without the assistance from the employer if the employer is not cooperating with the employee.
- Attested claims form from any gazetted officer, magistrate, MLA, MP or President of the Village Union of the employee can be submitted to apply for claiming the PF amount.
- New separate forms have introduced (downloadable from EPF portal) to facilitate claims submission for employees with and without Aadhar.
The EPFO schemes in India are a life saver for millions engaged in the organized sector. Although social security schemes like the ones offered by EPFO are provided by foreign governments also to their nationals and in many cases, they are better, yet in a huge country like India, providing people with such elaborate and useful social security schemes is a mammoth task that is indeed commendable. The EPFO is empowering every person employed in the organized sector. Their compulsory savings schemes have made millions of life secured and will continue to do that in the years to come. With a prestigious national award one- Governance, the EPFO is can only look forward and take its members along with it through its initiatives.