EPF - Employees Provident Fund

Last Updated 05th Jul 2020

EPF Details


  • The current interest rate on EPF is 8.50%.
  • Funds in EPF are pooled by the employer and the employee.
  • EPF scheme provides various tax benefits.
  • EPF is mandatory for the organization with more than 20 employees.
  • Banks also provide loan against EPF.
  • Covid-19 Relief Atmanirbhar Rs 20 lakh Crore Package ( 13th May 2020 ): EPF contribution has been reduced to 10% from existing 12% for both employee and employer for next 3 months (Read Details) news

What is EPF?

EPF or Employee Provident Fund is a fund maintained by Employee Provident Fund Organisation of India (EPFO). It is a retirement benefit saving scheme under which every employee must contribute 12% of the basic pay into the fund. The fixed-rate of 12% is contributed equally by the employer, of which 8.33% is directed towards the employee pension scheme by the employer. The employee can withdraw the amount saved in the EPF after retirement. However, in case of financial contingencies, the partial portion of this fund can be utilized by withdrawing the funds under EPF form 31.

Covid-19 Relief Aatamnirbhar Rs 20 lakh Crore Package ( 13th May 2020 )

EPF contribution has been reduced to 10% from existing 12% for both employee and employer for next 3 months.

EPF support for workers eligible under PM Garib Kalyan Package (PMGKP)

  • EPF to be deposited by Govt of India - For eligible establishments, 12% contribution of employer and 12% employee contributions was made by govt of India for the salary month of March, April and May 2020. Now this support will be extended by another 3 months to salary months of June, July and August 2020.
  • This scheme is applicable only for those who have less than 100 employees in their company and 90% of these employees have a monthly income of less than Rs. 15,000.

Workers who are not eligible under PM Garib Kalyan Package

  • EPF rate reduction - Statutory PF contributon of both employer and employee has been reduced to 10% each from existing 12% each for all establishments covered by EPFO for salary months of June, July and August 2020.
  • EPF rate for Govt employees - CPSEs and State PSUs will continue to contribute 12% as employer contribution.

EPF Interest Rate

EPFO reviews the interest rate of EPF each year after negotiations with the ministry of finance. For the fiscal year 2019-2020, the interest rate stands at 8.50%.

KYC Requirement for EPF and Process to Update

To claim the withdrawal from EPF online, one needs to update KYC documents. It helps to withdraw the amount without any attestation from the employer. To update KYC details, you need to go to the e-portal of EPFO and click on ‘manage’ tab on the KYC drop down option. The documents (PAN card, Aadhar card, ration card, etc.) can then be updated on the portal. After the submission of documents, these are further assessed by the employer before providing approval.

What is UAN (Universal Account Number)?

UAN or the Universal Account Number is a 12- digit number, allotted by EPFO at the request of the employer. It helps to maintain multiple member identification numbers (Member Id), provided by different organizations under the universal account number. The number helps the employee to easily withdraw the PF balance of the previous organization without depending on the employer. For instance, if an employee has joined a new organization, he can provide the UAN, which would be marked with the new member id by providing the minimal KYC documents. In case he doesn’t have UAN, he can provide a PF number to the employer from the time he left the job. To see the status of UAN, you can visit https://unifiedportal-mem.epfindia.gov.in./memberinterface/.

EPF Contribution

EPF contributions are made by the employer and employees regularly every month. The percentage of EPF contribution stands as follows.

Contribution Percentage contributed
Employee 12%
Employer 12%

Employee Contribution in EPF

An employee has to contribute 12% of the basic pay every month. In the following cases, the employee contribution rate for EPF is 10%:

  • An establishment in the industry of Jute, Beedi, Guar Gum Factories, Coir, and Brick.
  • Any industrial company which is declared sick by the Board for Industrial and Financial Reconstruction.
  • Any company or establishment with less than 20 employees.
  • An establishment which has incurred losses equal to or more than its net worth in a financial year.

Employer Contribution in EPF

An employer has to contribute a total of 13.61% of the salary towards the EPF. Of these, the fixed rate of 8.33 % is contributed towards the employee pension scheme, and the remaining 3.67% of funds are contributed towards EPF. An additional 1.61% is also paid as administration costs related to EPS and insurance.

Example

Consider this example to have a better understanding on the contribution of EPF.

If an employee has a monthly salary of Rs. 40,000, in which the basic pay is Rs. 20,000. The break-down of the EPF stands as follows:

Contribution by employee: 12% of Rs. 20,000 = Rs. 2400
Contribution by employer: Towards EPS = 8.33 % of Rs. 20,000 = Rs. 1666
Towards EPF: 3.67% of Rs. 20,000 = Rs. 734
Additional cost: 1.61 % of Rs.20,000 = Rs. 321

Employee Provident Fund Forms

The registration of new employees for EPF and withdrawal of funds from EPF can be done using EPF forms which can be downloaded from the e-portal of EPFO. Here is the list of some essential forms that you can find on the website.

  • Form 14 - To buy LIC policy
  • Composite Claim Forms - Partial withdrawal, Full settlement, and Pension Withdrawal benefit.
  • Form 5 - Registration of new employees
  • Form 13 - EPF account transfer.
  • Form 11 - Auto transfer of EPF

EPF Withdrawal

Unlike any other bank accounts, funds can be withdrawn from EPF with subject to following terms and conditions:

  • Although EPF is a retirement scheme and the funds are withdrawn from the account after retirement, there are certain clauses, which permit partial withdrawal of funds for meeting financial emergencies. The procedure for the same is mentioned under EPF form 31.
  • 90% of the funds can be withdrawn from EPF before one year of retirement provided the person is 54 years or above.
  • EPF withdrawal is also permitted if a person is unemployed for more than one month. In such a scenario, 75% of the withdrawal is permissible after the period of 1 month of unemployment.

Thus, primarily there are three types of EPF withdrawal: Partial withdrawal, Full settlement, and Pension Withdrawal benefit, which can be claimed through composite claim forms available on EPFO’s e-portal.

FAQs

What is the age cap to withdraw the full amount of EPF?

You can withdraw the full pension if you are more than 58 years old.

Can an employer be part of the EPF scheme?

No, the employer contributes 12% of basic pay to the employee’s EPF.

What happens to EPF after the death of a member of PF?

The pension is either transferred to widow/widower or the children if they have attained the age of 25 years.

What is a composite claim?

Several claims forms like form no. 19, 10C, and 31 and UAN form no. 19, 10C, and 31 have been consolidated into a single form known as a composite claim form. This form can be used for partial and full withdraw of pension.

Can you view the balance of your EPF account?

Yes, EPF balance can be viewed by activating UAN, and you can see your balance by downloading the EPF passbook, by logging to your EPF account through UAN, or through SMS.

How is the interest rate of EPF credited to the account?

Compound interest is calculated on the monthly running balance, however it is credited at the end of financial year.


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