Employees’ Provident Fund (EPF) is a retirement scheme that an employee obtains from their employer. In this scheme, a fixed amount is deducted from the salary every month, which gets saved in the EPF account. Employee’s Provident Fund helps employees to create wealth, have a regular pension income, and secure their family’s future.
This post tells you how EPF works, how to register for EPF, the documents required, eligibility, benefits and how to check and claim EPF balance. Read on!
All employees pay a certain percentage of their salary towards the Employees’ Provident Fund. This amount is equally matched by your employer. The combined amount is then deposited into your EPF account, which is managed by the Employees’ Provident Fund Organisation (EPFO). Furthermore, you also accumulate a certain amount of interest every financial year towards your contribution.
For example, you pay Rs. 4,000 every month towards the EPF scheme. Your employer will add another Rs. 4,000 towards this sum. Meaning, a combined amount of Rs. 8,000 is deposited in your EPF account. On this amount, you will get an 8.5% yearly interest. However, the interest rate is subject to change at the EPFO’s discretion.
Now, the basic deduction towards EPF is 12% of an employee’s salary, which is called the employee’s contribution towards EPF. The employer also pays 12% of the employee’s salary towards EPF, known as the employer’s contribution to PF.
However, remember that in EPF, the percentage is deducted only from your basic salary, excluding HRA, conveyance allowance, special allowance, or any other benefit.
If you are an employee, your employer enrols you for EPF at their discretion. After successful registration, EPFO provides a 12-digit UAN (Universal Account Number), which stays the same throughout an employee’s career.
Furthermore, every time an employee changes his/her job, the EPFO assigns a new Member Identification (Member ID) that is linked with the UAN.
Employees who already have a UAN need to provide the same to the employer when they change their job. This will allow them to mark the Member ID with that number.
On the other hand, if you are a first-time employee, you will have to get your UAN from your employer or by yourself.
Here are the steps through which employers can generate UAN of employees:
After following these steps, the employer will receive the UAN of particular employees.
Mentioned below are the Employee Provident Fund registration steps for employers:
The USSP will email you upon confirmation.
Both employees and employers must produce a few documents to complete the PF registration process. Find them below:
Registration for Employees’ Provident Fund is compulsory for the following establishments:
Organisations featuring fewer than 20 employees can also register with EPFO for employees. However, that would count as voluntary registration.
Moreover, an employer must register for EPF within a month of employing more than 20 employers. Failure to do so could result in heavy penalties.
Your contributions towards EPF bring along a host of benefits:
Employees can check their EPF balance in the following ways:
Doing so will unlock your passbook, and you can view your EPF balance.
Note that to access your passbook, your UAN must be verified and activated by your employer.
If you do not withdraw the PF balance from your account within 3 years of the last contribution, your EPF account becomes dormant.
Follow these steps if you have an unclaimed amount and want to liquidate it:
A field officer will verify your application, and the EPFO will send you further details regarding your request.
Employees’ Provident Fund is an excellent savings option for salaried employees. Knowing the benefits and features of an EPF account will help you understand your finances better. It can also be a saviour during an emergency situation. Check your EPF balance every year and withdraw the amount every three years to keep your EPF account active.
Ans: Yes, the EPFO allows employees to withdraw some amount from their EPF balance while employed. Withdrawals of such nature are called advances and can be taken against only in specific situations, such as when purchasing a house, for child’s education and medical needs of spouse or child.
Ans: Only partial withdrawal is allowed, that too, only during emergency situations. Moreover, EPFO allows withdrawal of 90% of the sum before 1 year of retirement, provided that the person is aged over 54 years.
Ans: Yes, you can opt-out of EPF only if your salary (basic + DA + allowances) is more than Rs. 15,000 per month. However, you will have to take this decision as a first-time employee when you still do not have an EPF account.
Ans: An employee can become a member of EPF as soon as he/she joins an organisation. There is no lower age limit. The organisation takes the initiative to enrol their employees under this scheme if their monthly salary (basic + DA) is less than Rs. 15,000. However, employees drawing more than Rs. 15,000 monthly can also choose to be a member of EPF.
Ans: If you have changed jobs, your employer adds a new Member ID to your UAN. You can easily transfer the balance of your old account to the new account through the UAN Member e-Seva Portal. If your employer has opened a separate UAN, you can either withdraw your balance or transfer it to your new UAN. Note that you can conduct this process only after two months of leaving your job.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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