look news india
Most of the salaried employees working in private and organized sector consider the PF (Provident Fund) deducted every month in their salary slip as just a mandatory savings. The common belief is that this money will be returned only after changing jobs or retiring at the age of 58-60 years.
In reality, Employees Provident Fund Organization (EPFO) Not just a savings account, it provides a comprehensive financial and social security net for the employee and his entire family. The 12% contribution deducted from your basic salary and dearness allowance (Basic + DA) and the equivalent contribution deposited by the company gives you 5 important rights and facilities, which guarantee financial security in any emergency.
Employee Deposit Linked Insurance Scheme (EDLI Scheme, 1976) is the biggest and important security feature of PF, about which very few employees are fully aware:
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Zero Premium Cost: Not a single rupee is deducted from the employee’s salary for this insurance cover. Its entire premium (0.50%) is borne by the employer.
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Extent of cover: If the employee dies due to any reason during employment, his nominee or legal heir Minimum ₹2.5 Lakh to Maximum ₹7.0 Lakh A lump sum life insurance claim of Rs.
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Condition of Continuous Service: If the employee has rendered continuous service in the 12 months preceding the death (even if he has changed companies during this period), the family is still entitled to the full insurance benefit.
Out of 12% contribution to be deposited by the company 8.33% share Employees Pension Scheme (EPS-95) Goes in:
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Lifetime Pension Guarantee: If an employee has completed minimum 10 years of pensionable service in his entire career, then he starts getting monthly pension for life once he turns 58 years of age.
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Family Security (Widow/Orphan Pension): If the employee dies during service or after the commencement of pension, ‘Widow/Widower Pension’ for life to his spouse and ‘Children Pension’ to two children up to the age of 25 years is provided directly by EPFO.
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Disability Pension: In case of permanent disability due to accident or illness during employment, monthly pension starts immediately without any service condition of 10 years.
In times of financial crisis, people often have to resort to expensive personal loans or credit card loans, whereas money deposited in PF account can be useful without any interest:
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Illness and Hospitalization: In case of serious illness or hospitalization, medical advance can be withdrawn from the PF fund without any minimum service period.
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IT-Enabled Auto Claim (Auto-Settlement): Under EPFO’s modern auto-mode system, illness related claims up to ₹ 1 lakh are processed by the computer system in 3 to 4 days and transferred directly to the bank account without any human intervention.
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Marriage, education and house construction: Up to 50% employee share can be withdrawn for children’s higher education or marriage after 7 years of service and up to 90% of funds can be withdrawn for buying a house or flat construction after 5 years of service, which never has to be deposited back.
PF is also one of the most secure and attractive debt instruments in the country from investment and wealth creation perspective:
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Secure Returns: Being backed by the central government, it has a sovereign guarantee, meaning the risk of default is zero. Currently on EPF 8.25% compound interest annually Is getting, which is much more than the 5 year FD of banks.
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EEE Tax Status: PF has exempted-exempt-exempt (EEE) category status under the Income Tax Act. Tax exemption up to ₹1.5 lakh under Section 80C, interest earned on it is tax-free (for employee contributions up to ₹2.5 lakh per annum), and the entire withdrawal after 5 years of continuous service is 100% tax-free.
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One UAN, Lifetime Facility: Now there is no need to visit old offices for PF transfer after changing job. The 12-digit UAN remains the same for life and upon joining a new company, the old funds are directly linked to the new account through the auto-transfer facility.
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Returns even on inactive accounts: Even if an employee leaves the job and does not immediately take up a new job, the fixed interest continues to be added on his PF balance till the age of 58 years. The account is not considered completely inoperative until the member turns 58 years of age.
Employees should regularly check the e-passbook on their ‘UMANG’ app or EPFO member portal and update the same in their account. e-Nomination It must be recorded, so that in case of any untoward incident, the family does not face any legal hurdle in taking the claim.