In this article, we will discuss few EPF rules which are not known by the individuals. An employee’s small portion of the salary (12% of the basic salary) is re-invested in EPF or Employee Provident Fund.

This is what most of the people are aware about, but there are lot of things which people don’t known and this article will help in knowing about EPF rules.

 

 

1. Employee can get the benefit of pension under EPF

Do you know that there is an important component named EPS (Employee Pension Scheme) in provident fund? The EPF part is actually for your provident fund and EPS is for your pension.

An employee makes 12% contribution from his/her part of the salary in full, but the 12% contribution which the employer makes, out of that 8.33% of Basic Salary or Rs. 1250 whichever is less actually goes in EPS (Employees Pension Scheme) and the remaining amount goes to EPF. Employer contribution actually makes up the pension corpus. But, there are few points which are to kept in mind:

a) The person is liable for pension only if one has completed the age of 58.
b)  The minimum pension amount is Rs 1,000 per month.
c) One is liable pension only if he/she has completed 10 years of service.
d) Lifelong pension is available to the member and upon his/her death member of the family are entitled for the pension.

2. Employee can also nominate someone for the EPF

Do you known that Employee can also ‘nominate’ someone for EPF? The nominee will be communicated only at the time of death of the person and handed over the money from the provident fund. However, if the employee has not nominated, then they can submit a form called Form 2 which is to be filled to change or update the nomination.

3. The employee can invest more in Provident Fund, its called VPF

The employee can invest more than 12% contribution of the basis salary in Employee Provident Fund which is called VPF (Voluntary Provided Fund). In this situation the excess amount invested in PF and the employee will get interest for the excess sum invested. But, the employer cannot match the contribution made by the employee.

4. Withdrawing of EPF amount at job change is illegal

Most of the person have a misconception, that withdrawing of the Employees Provident Fund amount after a job switch is totally fine and allotted, however as per the EPF guideline it is illegal.

The employee can withdraw EPF money, only when the employee has no job at the time of withdrawing your money and 2 months have passed. Transfer of the EPF amount is allowed in case the employee gets a new job and switches to it.

However, in case of EPS, if the service period is less than 10 years, the employee has an option to either withdraw the corpus amount or get it transferred by obtaining a “Scheme Certificate”. Once the service period of 10 years, lapses the withdrawal option is ceased.

5. No Interest charged on Employee Pension Scheme

No interest is charged on Employee Pension Scheme (EPS).Employee Pension Scheme part (8.33% out of contribution from your employer or Rs 1250 whichever is minimum) does not get any interest. However, compound interest is provided only on EPF (Employee Provided Fund) partial. While at the time of withdrawing, the employee gets both EPS and EPF.

6. EPF gives some Life Insurance too

Many people might not known not be aware that in case a company is not facilitating the with group life insurance to its employees, in that case the employee is given a small life cover age through EPF which is called as Employees’ Deposit Linked Insurance (EDLI) scheme.

However, the companies which already have life insurance benefits to employees as part of the company are exempted from this EDLI scheme. But, the negative factor of EDLI scheme is that the life cover only a small part under this option is very low and that’s maximum amount of Rs. 60,000.

7. Employee can withdraw money on special occasion

The employee cannot withdraw it fully, but he/she can withdraw partial amount. Here below is the list of events when he/she can withdraw the Provident Fund amount and also fulfilling the following conditions:-

1. Occasion of Marriage or Education of self, children or siblings.

– Completed a minimum of seven years of service.

– The maximum amount withdrawn is 50% of the contribution.

-The individual have to submit the wedding invitation or certified copy of fee payable.

2. Medical treatment for self or family (spouse, children and dependent parents).

– The maximum amount that can be withdrawn is 6 months of salary.

– For major surgical operations.

– Show proof of hospitalization for one month or more with leave certificate for the period from your employer.

3. Repayment of house loan for a house in the name of self, spouse or owned jointly.

– Completed at least 10 years of service.

– The people are eligible to withdraw an amount that is up to 36 times of wages.

4. Alteration/repairs to an existing home for house in the name of self, spouse or jointly.

– A minimum service of five years (10 years for repairs) after the house was built/bought.

– Draw up to 12 times the wages, only once.

5. Construction or purchase of house or flat/site or plot for self or spouse     or joint ownership

– Completed at least five years of service.

– The maximum amount you can avail of is 36 times your wages. To buy a site or plot, the amount is 24 times your salary.

– Can be avail of it just once during the entire service.

8.  One can opt out of EPF if he wants

Yes! This might be a surprising fact for many, but if employee’s salary per month is more than Rs. 15,000, then he has an option to opt out of Provident Fund (PF) not been part of it. If such situation, pops up then he will get all the salary in hand (without any deduction every month).

But the sad part is that the employee has to opt out of Provident Fund in the start of his job. If he has been part of EPF even once in his life, then he can’t opt out of it. However, if he already had EPF account in his life. This option is not for the employee, but if he join a new job and the PF account does not exist, then he can opt out of EPF (Employee provident Fund). The employee needs to fill up Form 11 for this.

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