EPF(Employee Provident Firm) which was originally Employees’ Provident Funds Ordinance came into existence on 15th November 1951,but was later replaced in 1952. A provident fund is basically an investment done jointly by the employee and the employer which ends up being a support to an employee on retirement.
There are three basic parts to the provident fund:
1) Inflow to fund: It is further done in two waysA) Employees Contribution: This is the amount of money that gets deducted from the employee’s salary every month. The amount ranges between 2-15% depending on theterms of the employer.B) Employers Contribution: The amount of money contributed by the employer each month at a rate no less than the contribution made by the employee, but the amount must not increase 15%.
2) Outflow of funds: It is done in three different caseA) Death: If the employee dies before the specified retirement age the money is withdrawn.B) Unemployed: If the employee is unemployed for two months of time.C) Retirement: The person can withdraw money at the time of retirement or on after the age of 58.
3) Investment Return:A) Returns from employee contributionB) Returns from employer contribution
1) It is compulsory for the employees who draw a basic salary of less than 15000 per month to become member of the EPF and once you have become a scheme member you cannot opt out of it.
2) EPF scheme is mandatory if they have more than 20 employees working for them.
3) Employees who earn more than 15000 can also register for an EPF account although they can get approval from the assistant PF Commissioner.
4) Companies with less than 20 employees can also join EPF on voluntary basis.
Steps to check PF balance:
Step 1: Visit the government EPF portal
Step 2: Select the location of your PF office.
Step 3: Fill the online form and the EPF account number shown on your payslip.
Step 4: Submit the form after verifying the details.
Step 5: If all the fields are correct the EPF balance will be sent as an SMS to the registered mobile number.
Benefits of EPF:
1) Loan against PF: A PF account holder can take a loan against their PF balance and the interest of this loan is only 1% in case of financial emergency. The loan can be repaid within a time frame of 36 months.
2) Free insurance: Under Employees’ Deposit Linked Insurance(EDLI) Scheme if a person dies during the service period , a PF holder by default becomes eligible for free insurance up to rupees 7 lakh.
3) Home loan repayment: Under Employees Provident Fund Organization, a person can withdraw 90% of the PF balance for buying a new home or constructing a home.
4) Partial withdraw during an emergency: In case of some emergency like medical or financial, EPFO allows partial withdrawal.
5) Pension Provision: A PF holder is eligible for pension after 58 years as well if the person has minimum of 15 years of regular monthly PF contribution in their PF account.