If you are working as an employee in a corporate establishment, there are multiple things that you would like to know about the Employee Provident Fund (EPF). In this post, we have attempted to discuss the features and benefits and a few other vital details of Employee Provident Fund Scheme. Let’s discuss further without hovering around here and there!
Features and benefits of EPF
On reckoning the below-discussed features and benefits, you’ll be able to perceive various segments of EPF and also how EPF can stand out with you as your financial companion. Let’s begin:
It covers every set-up in which 20 or more personnel are engaged and some of the organizations are covered under certain conditions and exemptions even if they employ under 20 personnel.
According to the rules of the EPF, if you are an employee who joins a company with a pay of below Rs. 15,000/month must compulsorily become a member of the EPF Scheme.
Although, if you join a company with a pay of over Rs. 15,000/month, you can become a member if you and your employer agree.
If you’re a salaried individual, the monthly contribution towards the EPF remains as a forced saving system. Every month 12% of your total salary along with a corresponding contribution by your employer goes into your EPF account.
If you are an employee receiving over Rs. 15,000/month, you can choose a maximum deduction of Rs 1,800 (12% of Rs 15,000) in place of 12% of your total salary.
The employer contributes 8.33% into a pension fund for the employee called (Employee’s Pension Scheme – (EPS) but it is computed on Rs. 15,000/month and contributes 3.67% towards the EPF.
So, if your basic pay is equal to Rs. 15,000/month or more, Rs 1,250 (8.33% of Rs. 15,000) as a fixed contribution amount will flow into EPS every month.
While, if your basic pay is below Rs. 15,000/month, 8.33% of your total salary will flow into EPS. Moreover, your employer also contributes 0.5% of your basic salary towards Insurance for employees called (Employee’s Deposit Linked Insurance Scheme – (EDLI) or a maximum of Rs. 75/month alongside 0.01% towards EDLI handling charges and 0.65% towards EPF administrative charges.
You will have the access to your EPF account when you retire from your organization or your nominees get the same in case of your inopportune death.
As per the EPF rule, to get your final PF settlement, you’ll have to retire from your service after obtaining the age of 55 years. Your total EPF balance includes your contribution and your employer’s contribution along with the accrued interest.
There is, although, an option to partly take out the amount for those who are nearby their retirement. In other words, if you are over 54 years, you can claim up to 90% of your PF balance.
Plots of an early claim of PF balance
There might be times, when you are lacking funds and you are unable to organize from anywhere, your EPF can come handy at that time. The money in your EPF account can be claimed ahead of time (before retirement) as a non-refundable advance in the following conditions:
- Effective from December 6, 2018, the employees can claim 75% of their PF balance after being unemployed for one month and the remaining 25% balance can be availed after s/he is unemployed for 60 consecutive days or more. Before this, an employee was entitled to make such claim only post being unemployed for over 60 straight days.
- 50% of the employee’s portion of the PF balance can be claimed for the wedding of self, siblings, or children if the EPF account has been retained for a minimum of 7 years.
- 50% of the employee’s portion of the PF balance can be claimed for the education of self or children after 10th standard if the EPF account has been retained for a minimum of 7 years.
- 90% of the accumulated PF balance can be claimed by the employee for the purpose of paying off the home loan if the EPF account has been maintained for at least 10 years.
- If the EPF account has been retained for at least 5 years, up to 24 times of the total salary can be claimed for buying a plot and up to 36 times of the total salary can be claimed for the construction purpose of a house subject to the balance in the EPF account.
- Up to 6 months’ salary of the employee or employee’s contribution + accrued interest whichever comes out to be lower, can be claimed for a medical emergency of self or family member without any service span requirement subject to the balance in the EPF account.
Methods to claim EPF balance
Following are ways to take out your EPF balance:
Final Settlement Process
To claim theEPF balance, you can fill and submit the ‘Universal Account Number’ (UAN) based Form 19’ on the unified EPFO portal.
Advance Availment Process
In order to claim your EPF balance upfront, you can fill and submit Form-31 at your own through EPFO unified portal. If you do not possess Universal Account Number (UAN), activated and seeded to your bank account, then you will have to take help from your employer to get your balance. You can fill in Form-31 and submit it to the EPFO by way of your employer.
The bottom line
To conclude, EPF is a wise saving investment option for employees getting the basic pay of up to Rs. 15,000/month. If your salary is beyond Rs. 15,000/month then with the consent of your employer, you can contribute to your EPF account.
It stands out as one of the best financial alternatives post-retirement. It also helps with financial aid in times of emergencies. If you have your UAN, the PF balance can be availed via filling in and submitting the Form-31 through the financeEPFO member login portal.
In case, you don’t possess UAN then you can apply for one through the EPFO unified portal and if you have already applied for one, you can check your UAN status through the same portal.
Furthermore, if you are facing a cash crunch and unable to claim your PF balance due to not meeting the plots of availing the PF balance, then you can get instant fund assistance in form of a personal loan from the Afinoz instant loan app. All you are required to do is download the app from the Google Play Store and apply accordingly.