The employee would get a lump-sum

amount at retirement, which includes the contributions of both the employee and

the employer with the interest payments. However, 12% of the employer

contribution does not go to the EPF account. Out of the 12% contribution, 8.33%

goes towards the Employee Pension Scheme Account, and the remaining 3.67% goes

to the employee EPF account.

It is compulsory for all

employees who draw a basic salary of less than Rs 15,000 per month to become

members of the EPF. You cannot opt-outopt-out of the EPF scheme once you become

a scheme member. An employee can make an enhanced contribution up to a maximum

of 100% of the basic salary to the voluntary provident fund. The employer will

not match the contribution.

What must you know about EPF

EPF contributions

are not taken only from your salary. Your employer is also bound to make equal

contributions to your EPF account every month.

Employees must

link the Aadhaar number and the bank account with the UAN.

You can nominate

anyone for your EPF account. In case of the account holder’s demise, the

nominee will pay the account balance.

You can change

the nominee by submitting Form 2 to your company’s finance department or the

EPFO department.

About 8.33% of

your employer’s monthly contribution (up to Rs 1,250) will be redirected to the

Employee Pension Scheme (EPS). This will help you get a monthly pension once

you retire and fulfil certain conditions.

If you decide to

quit your job and withdraw the balance from your EPF account once and for all,

you will only be able to remove a portion of the amount based on the purpose of

withdrawal. Some valid reasons are unemployment, retirement, purchase of land,

purchase/construction of a house, renovating a house, wedding, education,

repaying a home loan, and medical reasons.

If you are a

retired person and have had continuous employment for the last 10 years, you

can withdraw 100% of the EPS account balance. In case, you don’t have

continuous employment for the last 10 years, you can only withdraw money from

the EPS account, according to the slabs based on your previous drawn salary as

mentioned in the Table ‘D’ below:

*Effective from 10 June 2008 as

stated by the EPFO website. Irrespective of the last drawn salary, the maximum

salary considered for this calculation is Rs 15,000. Therefore, if your last

drawn salary is Rs 32,000 and you have worked for eight consecutive years, the

EPS amount you can withdraw is Rs 15,000 * 8.22 = Rs 1,23,300.

You don’t have to withdraw the EPF

contributions or close the account when you switch jobs. Just provide your UAN

to the new employer. The new PF number created by your new employer will still

be under your existing UAN.

You must manually transfer the PF

account balance from your previous employer to the PF account created by your

new employer by filling Form 13. Alternatively, you can fill Form 11 to

transfer the PF contributions to the new account automatically.

You can check your EPF account

balance, transfer request, claim status, request to withdraw, and raise

grievances online using the EPFO portal or even on the UMANG app.

How to check PF balance?

Step 1. Visit the government EPF

portal

Step 2. Select the location

(state, regional branch office) of your PF office

Step 3. Fill the online form with

your personal information and the EPF account number shown on your payslip

Step 4. Submit the form after

verifying the details provided

Step 5. If all your records are

in place, your EPF balance will be sent as an SMS to your registered mobile

number.

How to transfer EPF money

Step 1. In the event of a job

change, EPF can be transferred using the Universal Account Number (UAN), which

will remain the same.

Step 2. Go to the official EPF

member portal and complete the registration

Step 3. Log in once you get the

login credentials

Step 4. Visit the Online Transfer

Claim Portal and request for EPF transfer using the same login details as above.

Step 5. If you are eligible to

make the transfer claim online, you can do it without having to submit Form 13

Step 6. Click ‘Request for

Transfer of Funds’ and enter your old employment details as directed

Step 7. Get it authenticated by

your previous or new employer

Step 8. After entering the

details, you will receive a PIN on your mobile

Step 9. Use the tracking ID

generated for you to track your application.

 

Benefits of EPF

·       

You can nominate a family member as your nominee

so that they can avail the pension or the corpus in the event of your demise.

·       

You will get a fixed income once you retire.

·       

EPF allows you to invest more than 12% of your

basic salary every month under the Voluntary Provident Fund.

·       

You also get life insurance covered under the

EPF.

·       

When you withdraw from the EPF at retirement,

you can avail both the EPS and the EPF.

·       

You can withdraw early in case of an emergency

under certain defined conditions like a job loss, wedding, loan repayment and

so on.

Where does the EPFO invest my

Around 45%-50% of the EPF funds

are invested in Government Securities and related instruments. You will find

35%-45% of the EPF money invested in debt and related instruments. There is

also an investment in short-term debt instruments. The EPF invests around 5%

-15% in equities and related investments.

Does EPFO invest in ETFs?

Yes, EPFO invests in Exchange

Traded Funds or ETFs. You have the EPFO investing in the Sensex and the Nifty50

along with the CPSE (Central Public Sector Enterprises) and the Bharat 22

indices.

Does the EPF offer a high rate

Yes, EPF currently offers 8.1%

for 2022-23. It is one of the highest interest rates among fixed income

instruments. The EPFO also invests in equity markets through ETFs. It is a

relatively small portion of a minimum of 5% up to 15% of the EPF funds. The

investment in the EPF Scheme gets a tax deduction up to a maximum of Rs 1.5

lakh per year under opt-out Section 80C of the Income Tax Act, 1961. It falls

under the EEE (exempt exempt exempt) category, where the accrued interest and

the amount accumulated on withdrawal are tax-free. It makes EPF one of the most

tax-efficient investments. However, if the employer’s contribution towards

employee’s EPF account, NPS and superannuation fund is more than Rs 7.5 lakh,

the excess contribution will be taxable as a perquisite in the hands of the employee.