This is page is regularly updated with latest information and news about Employee Provident Fund (EPF). If you are not finding any more about EPF Details, please write to krishnas at thinkplaninvest.com or post it in the comments section. I will personally address your concern and edit this page to reflect the missing information. Thank you for visiting here.
What is EPF?
Employee Provident Fund (EPF) is a retirement benefit scheme that is available to the salaried employees. If you are a government employee or working for the private organisation, your employer has to open EPF account with the central govt. and deposit your EPF contribution along with their contribution.
- Currently 12% of the basic salary is deducted for this contribution.
- Interest rates will be set by central govt. every year.
- This fund is managed by Employee provident fund organization (EPFO)
EPF and Tax Exemption
EPF contributions are exempted under the section 80c. The total amount you have contributed towards the EPF account will be subject to the maximum of section 80c eligibility, could be whole amount or part will be subjected to the tax exemption. For example, if you have contributed Rs. 70000 towards the provident fund, if the maximum section 80c ceiling is Rs. 150000, then you can entitle the whole amount as the tax exemption. For more details about the section 80c, please read our detailed report on section 80.
What is UAN?
UAN stands for Unique Account Number. UAN is a 12 digit single account number which will be linked to your provided fund money. This come to the rescue of once cumbersome process involved on transferring the EPF amount from multiple accounts and get the EPF details. With the new system, every employee will be assigned to an UAN number, that will be used for ever irrespective of switching to a new job. He just need to mention the UAN number where ever he joins.
What ever the accounts created newly will be handled by this system, if you had any older EPF accounts which are opened before the UAN system will not be handled by the new system. But, if you have any active EPF accounts with the current employer, that will be assigned to a new UAN number.
Less Known Facts About EPF
- Nomination Facility: Do you know that, EPF account holder can nominate one person who will be contacted upon his death and handed over the EPF money. If there is no nomination given to the company, then there will be lot of issues. Employee can send Form 2 for updating the nomination details on his account. He can directly send this form to either his company’s finance department or EPFO office.
- One can opt out of EPF : This rule is less known by most of the salaried employees. If an employee wants to opt out of the EPF scheme, he has the chance of doing that by at the time of joining his first job. He / She can inform the employer about opting out of the scheme. But, Once he started his job by opening an EPF account, then he has to continue for ever. You will have to fill up form 11 for this purpose.
- Withdrawing EPF money when switching job is illegal : It is very common for the employees to apply for withdrawing his / her EPF money when they are switching to a new company. Instead transferring the EPF to new company, many young people withdraw their money for the daily needs. Though this process seems like normal, as per law this is illegal and withdrawing EPF money when switching job is not allowed. But, EPF officers don’t track the applications and file a case.
- Employee Pension Scheme : Do you know that Employee Pension Scheme (EPS) is part of your EPF account. 12% contribution made by your employer not fully goes into the EPF account, out of that 8.33% will be deposited to EPS account (subject to maximum of Rs. 541) and the rest will be deposited to your EPF account. That is the reason when you cross check your employer’s EPF contribution, it will not exactly match employee’s 12% contribution. But, there are some rules to utilize the EPS corpus:
- Employee has to complete the age 58 to be liable for pension
- Also employee is liable for the pension only if has has completed the 10 years service (all the 10 years he has to contribute to the EPS scheme, when he switches job he has to transfer the EPS account)
- The maximum pension per month is Rs. 3250
- Pension is entitled for life long, upon his death his family member is entitled for the pension
- There is no interest credited for the EPS contribution. Only EPF account will be entitled for the interest amount.
- Voluntary Provident Fund (VPF) : Apart from the mandatory 12% contribution, employee can contribute excess to the 12% as part of the Voluntary Provident Fund (VPF) and that contribution also deposited to the EPF account with same interest rates calculation. But, employer has no obligation to match your contribution.
EPF in Stock Market
This year, central government has passed the bill for allowing EPFO to invest their small part of the provident fund collection into the stock market in India. The allowed limi is 15% per year. However, EPFO wants to go the more caution, it starts with 5% in this financial year (2015-16) amounts to Rs. 5000 crore in total. From next year onwards it may increase it to 15% depends on the feedback received from various parties about the stock market investment.
EPFO will not invest into direct equity which is of more risk. EPFO has choosen SBI Mutual Fund Asset Management Company for investing the PF money to the stock market. Out of total money, 75% will be invested to SBI Nifty index and remaining 25% will be invested to SBI Sensex index funds. In future, EPFO would invest in other Assest Management Companies, which the talk is already initiated.
Is it good or bad for provident fund account holders?
It is an awesome decission by the EPFO to finally think about the stock market to improve the returns on milions for account holders. If you look at the track record of the stock market returns, it always outperform any other investments like Fixed Deposit, PPF, Gold or Real Estate. Also it helps Indian stock market to reduce their dependency on Foreign inflows. Overall, this is a good move by EPFO and for the long term the retruns will be very good.
EPF Withdrawl Rules
Provident Fund scheme is a retirement planning savings. There are lot of restrictions for the account holders to withdraw money as they want. Here is the important rules that are to be remembered before applying for the withdrawl. One has to fill the form 31 with his employer and submit for the withdrawal.
Here is the list of forms related to the Employee Provident Fund scheme.
- Form 11 – Opting out of EPF scheme
- Form 13 – EPF Transfer
- Form 2 – To update the nomination details
- Form 31 – This form used for withdrawing PF money on special situations
EPF Interest Rates History
|Financial Year||EPF Interest Rate|
|1952 - 53||3.00%|
|1953 - 54||3.00%|
|1954 - 55||3.00%|
|1955 - 56||3.50%|
|1956 - 57||3.50%|
|1958 - 59||3.75%|
|1959 - 60||3.75%|
|1961 - 62||3.75%|
|1962 - 63||3.75%|
|1963 - 64||4.00%|
|1964 - 65||4.25%|
|1965 - 66||4.50%|
|1966 - 67||4.75%|
|1967 - 68||5.00%|
|1968 - 69||5.25%|
|1969 - 70||5.50%|
|1970 - 71||5.70%|
|1971 - 72||5.80%|
|1972 - 73||6.00%|
|1973 - 74||6.00%|
|1974 - 75||6.50%|
|1975 - 76||7.00%|
|1976 - 77||7.50%|
|1977 - 78||8.00%|
|1978 - 79||8.75%|
|1979 - 80||8.25%|
|1980 - 81||8.25%|
|1981 - 82||8.25%|
|1982 - 83||8.75%|
|1983 - 84||9.15%|
|1984 - 85||9.90%|
|1985 - 86||10.15%|
|1986 - 87||11.00%|
|1987 - 88||11.50%|
|1988 - 89||11.80%|
|1989 - 90||12.00%|
|1990 - 91||12.00%|
|1991 - 92||12.00%|
|1992 - 93||12.00%|
|1993 - 94||12.00%|
|1994 - 95||12.00%|
|1995 - 96||12.00%|
|1996 - 97||12.00%|
|1997 - 98||12.00%|
|1998 - 99||12.00%|
|1999 - 2000||12.00%|
|2000 - 20001||11.00%|
|2001 - 2002||9.50%|
|2002 - 2003||9.50%|
|2003 - 2004||9.50%|
|2005 - 2006||8.50%|
|2006 - 2007||8.50%|
|2007 - 2008||8.50%|
|2008 - 2009||8.50%|
|2009 - 2010||8.50%|
|2010 - 2011||9.50%|
|2011 - 2012||8.25%|
|2012 - 2013|
|2013 - 2014|
|2014 - 2015|
EPF Details / Information / News
This section regularly updated with most useful articles and stories about the EPF scheme.
- Invest in EPF for retirement planning : One of the traditional and more safest investment or saving habits in India is monthly contribution for the Employee Provident Fund (EPF). Still many of us not aware of the advantages on EPF contribution and how it is superior when compare to the other safe investments. If you are looking for the retirement planning, have the continuous contribution towards the EPF is the way to go.
- EPF Balance Information on SMS : This is another good initiative from the Employee Provident Fund(EPF) organization to facilitate the members. Till now there is no proper mechanism for EPF members to get the balance details through online or SMS.
- Difference between NPS and EPF : NPS is pension scheme for the non-government employees and it will be considered as as the alternative investment for the retirement planning. If some one wants to plan for the retirement savings, there would be several options he can choose from the list.
- Employee Provident Fund (EPF) u/s 80C : EPF is compulsory deducted by every employer for their employees to save for their retirement planning. By default, EPF savings fall under the section 80c’s Rs.100000 category.
- EPF Transfer and Opening PPF Account : In your case you have to transfer the PF from your previous employer to new employer. Form 13 is used for transferring the PF account. Please follow the steps to complete your transfer process.
- EPF (PF) Transfer and Form 13 : In this article I will be writing about the Employee Provident Fund (EPF) or PF transfer from one employer to another employer and what is the use of Form 13.
- EPF – Online Transfer Claim Form from August, 2013 : Transferring Employee Provident Fund (EPF) to the present organization is one of the time taking task in the current process. In the current scenario, if one wants to transfer the EPF to his current organization, then he has to submit the Form 13 through his current employer.
- EPF withdrawal conditions : That is the reason why the rules for withdrawing the EPF amount is very strict. The following table illustrates the conditions involved on withdrawing the EPF amount. The following are some of the articles related to EPF which may be more useful for you.
- Proposed EPF rule will cut your take home salary : In the recent circular sent by Employee Provident Fund Organization (EPFO) has proposed the possible amendment on the EPF contributions. The existing rule says that 12% of basic salary + DA would be deducted towards the EPF contributions and the same amount would be contributed by the employers.
I hope that I have written most about the EPF details and the related rules to make you fully understand what is EPF, what are the tax exemptions, common rules, interest rates history and collection of tutorials related to the Provident Fund topic. I would be very much happy to receive feedback on hearing any missing information about this topic. I would like to educate every one about the Employee Provide Fund and start their retirement saving at the young age itself.
If you have any concerns, questions or feedback, please write to krishnas at thinkplaninvest.com or post it in the comments section. Every questions will be answered with more details. Thank you for visiting our website.