What is EPF?
While government employees enjoy the social security of availing pension, people working in private companies do not have this option. An Employee Provident Fund is a retirement benefit scheme that is meant for all salaried employees. The Employees Provident Fund Organization of India (EFPO) maintains and oversees the EPF. All companies that have more than 20 employees are mandated by law to register with the EFPO. The EPF works as a savings scheme for employees where a fraction of their salary every month is saved. This fund can be availed when you retire or when you are unable to work. This scheme can put your mind at ease as you will not need to depend on anyone for your expenses when you no longer work.
Benefits of EPF
1. You can nominate a family member as your nominee, so that they can avail the pension or the corpus in the event of your demise
2. You get a fixed income once you retire, without having to work
3. EPF allows you to invest more than the basic 12% of your salary every month under the provision of Volunteer provident fund
4. You also get life insurance cover under EPF
5. EPF is not mandatory, though it is strongly recommended that you join
6. When you withdraw EPF (after 60), you can avail both EPS and EPF
7. You can withdraw early in case of an emergency under certain defined circumstances like job loss, wedding, loan repayment etc
8. TThere is no need to withdraw or open a new EPF as you can link the old one and the new one
What you must know about EPF contributions?
- EPF contributions are not solely taken from your salary. Your employer is also bound to make equal contributions to your EPF account on a monthly basis.
- Employees must link their Aadhaar number and bank account with their UAN.
- You can nominate anybody for your EPF account. In the case of the account holder’s demise, the account balance will be paid to the nominee.
- You can change the nominee by submitting Form 2 to your company’s finance department or to the EPFO department.
- About 8.33% of your employer’s monthly contribution (up to Rs.1,250) will be redirected to the Employee Pension Scheme (EPS). This will help you get a monthly pension once you retire and fulfil certain conditions.
- No interest will be accrued on the contributions made towards EPS account.
- If you decide to quit your employment and withdraw the balance from your EPF account once and for all, you will only be able to withdraw a portion of it based on the purpose of withdrawal. Some of these valid purposes are unemployment, retirement, purchase of land, purchase/construct a house, renovating a house, wedding, education, repaying a home loan, and medical reasons.
- In the case of unemployment, withdrawal of EPF can be made before 58 years of age, with 100% withdrawal after two months of resigning from employment. An employee can also withdraw 75% of the EPF balance after one month of resigning from employment, with the balance 25% transferable to a new employer.
- If you are a retired person and have worked consecutively for the last 10 years, you can withdraw 100% of the EPS account balance.
- In case, you have not consecutively worked for the last 10 years, you can only withdraw money from EPS account according to the slabs based on your last drawn salary as mentioned in the Table ‘D’ below:
|Number of Years of Service||Eligible Portion of EPS Withdrawal*|
*Effective from 10 June 2008 as stated by the EPFO website. Irrespective of the last drawn salary, the maximum salary considered for this calculation is Rs.15,000. Therefore, if your last drawn salary is Rs.42,000 and you have worked for 8 years consecutively, the EPS amount you can withdraw is: Rs.15,000*8.22 = Rs.1,23,300
- You don’t have to withdraw EPF contributions or close the account when you switch jobs. Just provide your UAN to the new employer and that’s it. The new PF number created by your new employer will still be under your existing UAN.
- You must manually transfer the PF account balance from your previous employer to the PF account created by your new employer by filling Form 13. Alternatively, you can fill Form 11 so that the PF contributions are automatically transferred to the new account.
- If your basic salary per month is above Rs.15,000, you have the freedom to opt-out of EPF.
- You can check your EPF account balance, request for transfer, check claim status, request to withdraw, and raise grievance online using the EPFO portal or even on the Umang app.
How to Check PF balance?
Step 1. Go to the government EPF portal
Step 2. Select the location (state, regional branch office) of your PF office
Step 3.Complete the online form complete with your personal info and the EPFO account number specified in your payslip
Step 4. Submit the form after verifying the details provided
Step 5. If all your records are in place, you will be sent the EPF balance as SMS to your registered mobile
Rate of Interest in EPF
The money accumulated in the government EPF trust offers compounded interest. At present, the interest rate is 8.65%. EPF is under the purview of a Central Board of Trustees and the government, who decide the interest rate. They review the interest rate annually.Opening balance for 2018 – 2017 balance + monthly contributions in 2018+ interest
Variations in EPF Interest Rates So Far
|Applicable Financial Year||Interest Rate (per annum)|
|2004-2005||9.5% (Interest: 9% + Golden Jubilee Bonus Interest: 0.5%)|
|2000-2001||April-June 2001: 12% and July 2001 Onwards: 11% (On the monthly running balance)|
|1978-1979||8.25% + Bonus: 0.5% (Only for members who did not withdraw money from their EPF account during 1976-1977 and 1977-1978)|
How to transfer EPF money online?
Step 1. In the event of a job change, EPF can be transferred using the Unified Account Number (UAN) and the account number will stay the same
Step 2. Go to the official EPF member portal and register
Step 3. Login once you get the login credentials
Step 4. Visit the Online Transfer Claim Portal and request for EPF transfer using the same login details as above
Step 5. If you are eligible to make the transfer claim online, you can do it without having to submit Form 13
Step 6. Click ‘Request for Transfer of Funds’ and enter your old employment details as directed
Step 7. Get it authenticated by your previous or new employer
Step 8. After entering the details, you will receive a PIN on your mobile
Step 9. Use the tracking ID generated for you to track your application
Note: You cannot withdraw all your EPF. You will receive your PF amount after the deductions mentioned under Table D in the EPF rules.