Employees’ Provident Fund or EPF

The Employees' Provident Fund, sometimes known as EPF, is a well-known savings programme that the EPFO launched under the direction of the Government of India.

EPF is funded by 12% of the employee's base pay and dearness allowance from both the employee and employer. EPF deposit interest is now paid at an annual rate of 8.10%.

The accrued interest in the EPF is tax-free and can be withdrawn without incurring fees. When an employee retires, they receive a lump sum payment that includes all accumulated interest.

 By visiting the official website, people can apply to use the different online services offered by EPF India. The user-friendly EPF web portal makes sure that services are delivered in a transparent, effective, and hassle-free manner.

Schemes Offered Under EPFO

The three plans provided by EPFO are listed below:

• Employees' Provident Funds Scheme 1952 (EPF)
• Employees' Pension Scheme 1995 (EPS)
• Employees' Deposit Linked Insurance Scheme 1976 (EDLI)

Objectives of EPFO 

The EPFO’s primary goals are as follows-

• Compliance needs to be as straightforward as feasible.
• To expand the capabilities of internet services and to ensure their dependability.
• Online access should be simple for all member accounts.
• From 20 to 3 days, claim settlement timeframes will be shortened.
•   Promotion of voluntary compliance and encouragement of it.

UAN and EPFO Portal

All EPF subscribers have access to their PF accounts online, and they can utilise it to carry out operations like withdrawals and checking their EPF balance.

Each EPFO member is granted a 12-digit identification code known as a UAN. Even if an employee changes employers, their UAN remains the same.

The Universal Account Number (UAN) facilitates access to the EPFO member portal. When a person changes jobs, their member ID also changes, and the new ID is linked to their UAN. To utilise the services online, however, employees must first activate their UAN.

EPF Eligibility

The following criteria must be satisfied in order to participate in an EPF programme:

• Employee Provident Fund membership is open to both public and private sector workers, therefore everyone employed in India is eligible to register.
• Any business with at least 20 employees is obligated to provide EPF benefits to those workers.
•  Employees who actively participate in the EPF programme are eligible to receive a variety of Employees Provident Fund benefits, such as insurance and pension benefits.

How is Interest on EPF Calculated?

Every month, the interest granted on EPF plans is computed by multiplying the rate per year by 12.

A strategy like this makes it easier to determine the precise interest rate that is provided to member employees for a certain month.

For example –

If the rate of interest is 8.5% p.a. the rate for each month would be (8.5/12) %, i.e. 0.7125%. 

Now, 12% of an individual’s salary is directed towards their EPF account.

Assuming that the salary of an individual is Rs. 15,000 per month –

12% of Rs. 15,000 would accrue Rs. 18, 00 by month-end which would be transferred to the individual’s EPF account.

Now, employers contribute 3.67% towards their EPF account, while 8.5% is contributed towards their EPS account.

• The contribution towards the EPF account would be –3.67% of Rs. 15,000 = Rs. 550.
• The total contribution towards the EPF account would stand at Rs. (1800+550) = Rs.2350
• The interest accrued in one month would be Rs. 2350 x 0.7125% = Rs. 16.75

It should be emphasised that the account would only be credited with the interest that had accrued during a given month at the end of the current fiscal year.

EPF Calculation

You may simulate how much money will accumulate in your EPF account when you retire with the EPF calculator. You may calculate the lump-sum amount, which includes the interest that has accrued on the investment as well as your contribution and the employer's contribution.

The formula box that is provided allows you to enter your current age, basic monthly wage, dearness allowance, EPF contribution, and retirement age up to 58 years.

You can also enter the current EPF balance if you are familiar with the numbers. After you provide the essential information, the calculator will display the EPF funds that will be available to you when you retire.

EPF Benefits

• Capital Appreciation

Under the PF online plan, the EPF India deposit is eligible for a pre-fixed interest rate.

At maturity, rewards are given that further guarantee increase in the employees' money and quicken capital appreciation.

• Corpus for Retirement

The Employee Pension Scheme receives about 8.5% of the employer's contribution. Over time, the funds contributed to the employee pension fund help build a solid retirement fund.

Having such a corpus would provide people a sense of freedom and financial security after retirement.

• Emergency Corpus

There are many uncertainties in life. Being financially ready to deal with such unforeseen occurrences is the finest thing a person can do to deal with emergencies.

An EPF fund functions as an emergency corpus when a person needs money in a pinch.

• Tax-saving

In accordance with Section 80C of the Indian Income Tax Act, an employee's contribution to their PF account is deemed as being eligible for a tax deduction.

Additionally, earnings produced by EPFO programmes are tax-free. This exemption is available for a maximum of Rs. 1.5 lakh.

• Easy Premature Withdrawal

The benefits of partial withdrawal are available to EPF India members.

People can take money out of their PF accounts to satisfy their individual needs, such as paying for higher education, building a home, paying for a wedding, or receiving medical care.

Question & Answer

1. What is EPF ?

1. Employees’ Provident Fund
2. Employees Professional Tax
3. Employees' Pension Scheme
4. Employer Provident Fund

Ans : A. Employees’ Provident Fund

2) When did the Employees’ Provident Fund ?

1. 1 April 1956
2. 1 March 1957
3. 1 May 1950
4. 4  March 1952

Ans : D. 4 March 1952

3) Under this act insurance fund means……………

1. Medical Insurance Fund
2. Employees' Deposit Linked Insurance Scheme
3. Unit Linked Insurance Plan
4. Employee’s Group Assident Insurance

Ans: B. Employees' Deposit Linked Insurance Scheme

4)  UAN means ……..

1. Unique Account Number
2. Universal Account Number
3. Unique Employees Number
4. a & b

Ans : B. Universal Account Number

5) Which shall be paid by the employer?

1. 5%
2. 7%
3. 12%
4. 9%

Ans : C. 12%

6)  Which of the   following item is covered  section 80c ?

1. Tax-saving
2. Medical Insurance premium
3. Helth insurance
4. Non of above

Ans : A. Tax - Saving 

7)  How many plans provided by EPFO ?

A.   2

B.   3

C.   4

D.  5

Ans  : B.3

8)   How many digit identification code known as a UAN.?

A. 10

B.11

C. 15

D. 12

Ans : D.12

9)  Minimum ……….. persons must be employed in as establishment for the applicability of the PF act.

A.15

B. 20

C.30

D.50

Ans :  B.20

10)   How many claim settlement timeframes ?

A. 20 to 3 days

B. 30 to 5 days

C.  10 to 3 days

D. Non of above

Ans :  A. 20 to 3 days