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Often salaried employees think that Employee Provident Fund (EPF) is just a mandatory investment deducted from the salary every month, which can be availed only at the time of leaving the job or retirement. But in reality, this scheme run by EPFO works like a comprehensive social security shield for the employee and his family.
If an employee faces a sudden financial crisis, illness, job loss or an unexpected family tragedy, a PF account provides financial security in many ways. Know those 5 big benefits related to EPF account, about which every working person should know in detail.
The biggest and often overlooked benefit available to EPF account holders is the Employees Deposit Linked Insurance Scheme (EDLI Scheme 1976):
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Protection without any premium: For this, the employee does not have to pay a single penny from his own pocket as premium. Its entire expense is borne by the company (employer).
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Claim amount up to ₹7,00,000: If an active PF account holder dies untimely while in employment, his nominee or legal heir will receive minimum ₹2.5 lakh and maximum ₹7 lakh Life insurance claim up to Rs. 1000 is available directly.
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Basis of calculation: Insurance claim is calculated on the basis of the employee’s average basic pay (Basic + DA) of the last 12 months and his PF balance.
Out of the 12% contribution made by the company 8.33% share (maximum ₹1,250 per month) Directly deposited into the Employees Pension Scheme (EPS):
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Pension guarantee on 10 years of service: If an employee has completed minimum total service of 10 years, he/she becomes entitled to receive monthly pension for life after completing the age of 58 years.
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Widow/Widow and Child Pension: Unfortunately, if the member dies while in service, his/her spouse is given a family pension for life and child pension is given to two children per month till the age of 25 years.
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Early Pension Option: The facility of taking early pension after the age of 50 years is also available, although there is a partial reduction in the pension amount every year.
In case of any sudden financial emergency, instead of taking a bank loan or getting trapped in the heavy interest trap of personal loan, you can save money from your PF balance. Non-refundable Advance Can remove:
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Serious Illness (Medical Emergency): For serious treatment (like cancer, TB, heart surgery, organ transplant etc.) of self, spouse, children or parents, the employee can withdraw up to 100% of his share without any minimum service period.
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Construction of house or purchase of flat: After completion of 5 years of continuous service, advance withdrawal facility from PF is available to buy a house, book a flat or buy land.
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Higher education and marriage of children: After 7 years of service, an employee can take advance up to 50% of his total contribution for the marriage of children or for higher education after 10th.
If for some reason you lose your job or take a career break, EPFO gives you financial stability:
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Withdrawal up to 75% after 1 month: If the employee remains unemployed for 1 month, he can withdraw up to 75% of the amount from his PF fund, so that his daily needs can be met.
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100% settlement after 2 months: If no new job is found for more than 2 months, the employee can also withdraw the remaining 25% of the funds and close the account completely.
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Transfer on change of job: The best thing is that on joining a new company, the old funds are automatically transferred to the new account through UAN and the service history remains safe.
Even today there is no better option than EPF in the secure fixed income category:
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Highest Government Returns: EPFO currently provides to its members 8.25% per annum It is offering attractive and safe interest rates of Rs., which is much higher than most bank fixed deposits and Public Provident Fund (PPF).
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EEE Tax Status: Under the Income Tax Act, employee contributions are exempt under Section 80C, the annual interest earned on them is completely tax-free (for contributions up to ₹2.5 lakh per annum), and the entire amount received at maturity is also tax-free.
Don’t treat the EPF account as just a savings account; It is an emergency lifeline during your working life and a solid financial safety net after retirement.