The Employees’ Provident Fund Organisation (EPFO) supervised by the Ministry of Labour and Employment, Government of India, plays a pivotal role in providing social security to India’s organized workforce, with over 69 million contributing members. EPFO not only manages a substantial corpus of over ₹17 lakh crores but also ensures that members and their families have access to essential benefits such as provident funds, pensions and insurance.
Key Features of the EPF Scheme:
- Mandatory Contributions: Both employees and employers contribute 12% of the employee’s basic salary + dearness allowance towards the EPF. This dual contribution helps build a substantial retirement corpus.
- Insurance and Pension Schemes: The EPF scheme includes provisions for the Employees’ Pension Scheme (EPS) and the Employees’ Deposit-Linked Insurance Scheme (EDLI), providing additional financial security to members and their families.
- Interest Rate: The EPF currently offers 8.25% interest rate for F.Y 24-25 (subject to change every year), which is credited to the member’s account annually. The interest earned is tax-free.
- Universal Account Number (UAN): Each EPF member is assigned a 12-digit UAN, which remains same throughout their employment, simplifying the process of tracking and managing their EPF accounts, even when changing jobs & member ID.
- Tax Benefits: Contributions to the EPF are eligible for tax deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakh. The accumulated amount, including interest, is also exempt from tax at the time of withdrawal after 5 years of continuous service.
- Portability: Members can transfer their EPF account balance when changing jobs, ensuring continuity in their retirement savings.
- Digital Services: The EPFO has digitized many services, allowing members to access their accounts online, check balances and initiate withdrawals through the EPFO portal.
- Withdrawal Options: Members can withdraw their EPF savings upon retirement or under specific circumstances such as unemployment, medical emergencies, or for educational purposes. Partial withdrawals are also permitted for significant life events like marriage or home purchase.
| Salary = Basic + Dearness Allowance (Upto 15K only per month ) | EPF (Employees’ Provident Fund) | EPS (Employees’ Pension Scheme) | EDLI (Employees’ Deposit Linked Insurance) |
| EMPLOYEE’s Contribution From Salary | 12% | ||
| EMPLOYER’s Contribution From Salary | 3.67% | 8.33% | 0.5% |
But, can we truly easily access this funds in times of legitimate need? 1/3 of claim applications filed at EPFO get rejected due to unexpected issues viz., missing employer contributions or service overlaps. On top of that, its withdrawal forms can be confusing. Be prudent and raise a query here to understand the withdrawal ability of your PF to avoid surprises at the time of need!