Employees Provident Fund

Key Points about Employees’ Provident Fund (EPF):

Mandatory Contribution:

Both employees and employers are required to contribute a specific percentage of the employee’s basic salary and dearness allowance (DA) to the EPF every month. The current contribution rate is 12% of the employee’s basic salary and DA.

Voluntary Provident Fund (VPF):

In addition to the mandatory contribution, employees can choose to contribute a higher amount voluntarily, known as the Voluntary Provident Fund (VPF). The employer is not obligated to match the additional voluntary contributions.

Interest Rate:

The EPF contributions earn an annual interest, the rate of which is declared by the EPFO. The interest rate is compounded annually and is generally higher than the rates offered by regular savings accounts.

Withdrawal:

Employees can withdraw their EPF balance upon retirement, resignation, or in certain specific circumstances such as illness, disability, or when leaving the country permanently. The EPFO allows partial withdrawals for specific purposes, such as buying a house, medical emergencies, or higher education.

Employee Provident Fund (EPF) Account:

Each employee has an individual EPF account where the contributions, interest earned, and withdrawals are recorded. Employees can check their EPF balance and transaction history online through the EPFO portal.

UAN (Universal Account Number):

UAN is a unique 12-digit number assigned to every employee contributing to the EPF. It remains constant throughout the employee’s career, regardless of job changes. UAN simplifies the EPF management and transfer process.

EPF Nomination:

Employees are required to nominate family members or beneficiaries who will receive the accumulated EPF corpus in case of the employee’s demise. Nomination details can be updated by the employee as needed.

EPF Transfer:

If an employee changes jobs, the EPF account can be transferred to the new employer. This ensures continuity of EPF contributions and benefits.

EPF Pension Scheme:

In addition to the EPF corpus, employees also contribute to the Employees’ Pension Scheme (EPS), which provides a monthly pension after retirement based on the years of service and average salary.

The EPF scheme is designed to provide financial security and stability to employees during their retirement years. It encourages long-term savings and ensures that employees have a source of income after they retire from active employment.