Employees Provident Fund Organisation (EPFO)

Employees’ Provident Fund Organisation (EPFO) is a statutory body that helps you save for your retirement. The scheme is a low-risk, convenient saving tool that offers excellent interest rates and a pension.

EPFO members can login to their accounts online to check the status of their claims and view their EPF passbook. They can also file e-nominations.

Employees’ Provident Fund

EPF is a popular savings scheme that is regulated by the government. It is one of the two statutory social security bodies in India, alongside Employees’ State Insurance.

It is a mandatory benefit for employees working in India. It is framed under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. The Central Board of Trustees (CBT) is responsible for the management and administration of EPF.

The main purpose of this fund is to encourage saving habits amongst salaried people. The contribution of both the employer and the employee towards this scheme is used to build a substantial retirement corpus that can help employees lead a comfortable life after retirement.

Moreover, it also offers additional benefits to its members like a pension scheme and insurance schemes that can be used post-retirement. The funds are deposited into the account of the employee by his employer and the accumulated amount is withdrawn from it when an individual reaches retirement age.

As per the law, employers and employees must contribute an equal portion of their dearness allowance and basic salary to the EPF kitty. The employee’s share is exempted under section 80C of the Income Tax Act, but the employer’s contribution is taxable.

This money can be withdrawn for various purposes. For example, employees can make down payments for a home or pay their EMIs on a home loan by using their PF accounts.

When a person dies, the accumulated amount can be withdrawn by the nominee or legal heir of the deceased. The nominee or legal heir can claim it by submitting the required documents like death certificate and composite form.

Alternatively, the amount can be transferred to another employer. This process is called a transfer of PF balance and it can be done through a simple online process.

The Employees’ Provident Fund Organisation provides numerous services to its members through its portal, and these are delivered transparently and efficiently. Recently, the organization launched a PF account transfer service that can be used by both the employer and the member to facilitate the process.

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Pension

The pension scheme is a retirement benefit for employees, which ensures a steady stream of income. The scheme works on the basis of a fixed contribution of 12% from both the employee and the employer. The employee’s part of the contribution goes to EPF while 8.33 percent of the employer’s share goes towards EPS.

The monthly pension amount is calculated on the basis of a member’s average pensionable salary. The maximum monthly pensionable salary under the EPS scheme is Rs 15,000 per month for members and employers who have joined before September 1, 2014, and Rs 6,500 for those who join after that date.

However, the Supreme Court has ruled that the maximum cap of Rs 15,000 will be removed for EPS contributions from September 2014. This means that a higher contribution would have to be made by members who are already paying the EPS contributions on actual salaries.

This would mean that a huge portion of the EPF corpus would have to be transferred to EPS from the beginning, reducing the net benefit available to members. This may deprive them of the benefits of compounding.

It is advisable to start preparing for retirement by setting aside money from the beginning of your career or when you are in your mid-twenties. This will help you build a large pension corpus and give you an assured income after retirement.

As you age, you can switch to a different pension plan if you wish to. You can also opt for lump sum payment of your EPS pension amount.

There is a separate pension for widows and children under the EPS scheme. A widow can receive a pension for the life of the deceased or till her remarriage.

Moreover, children can also receive a pension on their own or on behalf of a spouse. In such a case, the pension amount is paid to a nominee appointed by the insured member.

If you are eligible for the EPS, you can apply online or with your regional PF offices to claim a higher pension. The APFC/RPFC-II will examine your case and send you the higher pension decision via email, post or SMS. If you are not able to get a decision, you can approach the Central Board of Trustees (CBT).

Insurance

Insurance is a huge rainy day fund that protects individuals from the unexpected events that can ruin their lives. Disasters and accidents happen at a moments notice, so insurance companies are constantly working to keep their financial stability strong so that they can continue to provide policyholders with peace of mind.

One such insurance scheme is the Employees’ Deposit Linked Insurance (EDLI), which provides life cover to EPFO accountholders and is available at no cost to them. All employees who work for organizations covered under the EPF and Miscellaneous Provisions Act, 1952 are automatically enrolled in EDLI.

The scheme is managed by the Employees’ Provident Fund Organisation, and the benefits are paid to the registered nominee or legal heir in case of death of an active member. The sum insured under EDLI is calculated as 35 times the average monthly salary in the past 12 months subject to a maximum of 7 lakhs.

Moreover, under the EDLI scheme, an employee’s family is also assured of a monthly widow/child/orphan pension as well as medical reimbursements in case of illness. The surviving family members can claim the benefit amount from their employer, who is required to attest the application form.

In addition to this, the EDLI scheme also offers some other benefits such as direct bank transfer of the benefit amount to the accountholder’s legal heir in case of their demise. This ensures that the beneficiaries get a lump sum payment, rather than having to wait for the amount to settle in their account.

However, there are some pitfalls involved in this scheme. The main issue is that the amount has to be claimed within seven days of the death, according to the Employees’ Provident Fund Organization.

This is because if the nomination is not submitted in time, it becomes difficult to verify it later on. The body has urged its members to submit nominations as soon as possible, so that they do not lose out on this important benefit.

To make a nomination, subscribers must have an active Universal Account Number (UAN) and Aadhaar details must have been seeded to their EPF account. They can then follow the following steps to make an e-nomination:

UAN

UAN or Universal Account Number is a 12-digit ID that helps you access your Employee Provident Fund (EPF) account. You can use this ID to check your PF balance, transfer funds, and withdraw from the fund.

You can get your UAN by visiting the EPFO website. Once you’ve registered, a web page will pop up asking for your details such as your UAN ID, Aadhaar number, name, date of birth, mobile number, and captcha code. After providing these details, you’ll receive an OTP on your mobile.

Your UAN will also help you to link multiple EPF accounts with one ID. This is a great way to simplify the process of withdrawing your PF from your different accounts.

Moreover, you can use your UAN to update your name and date of birth, as well as contact details such as mobile number or email ID. However, you must note that your employer will have to approve the changes before they can be processed.

In addition, you can link your UAN to your Aadhaar details to enjoy benefits like EPF membership and pension. The Aadhaar linked with your UAN will enable you to use your EPF account online, and you’ll be able to check your UAN number on your Aadhaar card.

The UAN will act as a unified ID for your EPF account, which is used to track all the contributions and balances from different employers. It will also enable you to link your PF account to your Aadhaar and make it easier to manage your financial future.

For employees, the UAN will be useful in tracking their total EPF contribution throughout their career. In addition, it will also make the process of transferring money from one PF account to another easy and hassle-free.

Aside from being portable, the UAN will also act as a centralized database for all your PF accounts, which is beneficial for you when you change jobs or switch between employers. Moreover, the UAN will be linked to all your Member IDs to allow you to keep track of your EPF transfers and withdrawals.