Employees’ Provident Fund Organisation (EPFO) offers three schemes with three different objectives to help working individuals build a suitable retirement corpus. These include the Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS), and Employees’ Deposit Linked Insurance (EDLI) Scheme, which serve as savings, pension, and insurance cover, respectively.
The government-run retirement fund body offers EDLI as a combination of EPF and EDS to private sector employees. The maximum benefit an employee could draw under EDLI is capped at Rs 7,00,000.
A part of the employee’s monthly salary is allotted towards the EPF. The employer also has to contribute an equal amount towards this every month. This amount remains with the EPFO until an employee decides to withdraw it. An annual rate of interest also gets accrued to this corpus.
With the power of compounding, these investments bear substantial returns over a period of time. To cite an example, consider the gross salary of an employee to be Rs 25,000. At 40% of gross pay, the basic salary is Rs 10,000.
Take into account the interest rate for the financial year 2021-22 at 8.1%. Also, consider the annual salary increase to be 10%. If the present age of an employee is 25 years, then at the time of retirement (58 years), the total EPF fund available would be greater than Rs 1 crore.
The EPFO has directed mandatory e-nomination for all its EPF members. While no deadline has been set at the moment, EPF members can e-file nominations of their own volition.
E-nomination provides authority to the nominee or dependents (spouse, children, and parents) of the EPF account holder to withdraw funds accumulated (EPF, EPS, and ELDIS) in the event of demise.
There are different rules when it comes to nominations under EPF and EPS. The EPF Act states that a family is:
Similarly, in the case of EPS, a family is defined as a spouse of the employee, a minor son or daughter of an employee, and an adopted son or daughter who was adopted before the demise of an employee.
Yes, if they don’t have a family member, anyone can be nominated.
No, they will have to file a new nomination in such a case.
No, it is not mandatory.
Yes, it is possible to add different nominees.
No, this is not required.
EPFO provides EPF, EPS, and EDLI schemes for employees' savings, pensions, and insurance. EPFO issues directive for e-nominations, allowing withdrawal authority to dependents. Nomination rules apply to EPF and EPS schemes. The e-nomination process requires UAN login, providing nominee details, and e-signing. E-nomination not mandatory for filing advance claims; different nominees allowed for EPF and EPS; no physical documents needed post e-nomination.