What is Employee Provident Fund? | All you need to know

Employee Provident Fund, often called EPF, is a crucial financial tool that offers employees a reliable way to save money for retirement.

It’s a government-sponsored scheme that ensures a financially secure future for employees after their active working years.

This comprehensive guide aims to shed light on every aspect of the Employee Provident Fund, from its fundamental concepts to the intricacies of contributions, withdrawals, and more.

What is Employee Provident Fund?

Employee Provident Fund, or EPF, is a statutory savings scheme introduced by the government to assist employees in building a corpus for their retirement.

It’s a social security program requiring employees and employers to make regular contributions to the fund.

These contributions accumulate over time and are available to employees upon retirement, resignation, or other qualifying circumstances.

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What are the Components of the Employee Provident Fund (EPF)?

EPF consists of two main components:

Employee Contribution

As an employee, a portion of your salary—typically 12%—is deducted monthly as your contribution to the EPF.

This contribution aims to build a substantial corpus over your working years as a financial cushion during retirement.

Employer Contribution

Your employer also contributes an equal amount—another 12%—to the EPF on your behalf. This joint contribution from you and your employer ensures that the fund grows steadily, maximizing the benefits you’ll receive.

The Benefits of Employee Provident Fund

EPF offers several advantages that make it an essential part of your financial planning:

  • Long-Term Savings: EPF encourages disciplined savings, ensuring you have a reliable source of income during your retirement years.
  • Tax Benefits: Contributions made towards EPF are eligible for tax deductions under Section 80C of the Income Tax Act.
  • Compound Interest: The contributions you make, along with interest earned, compound over time, leading to substantial savings growth.
  • Employer Involvement: Your employer’s contributions amplify your savings efforts, boosting the fund’s overall value.
  • Liquidity Options: EPF also provides options for partial withdrawals for specific purposes such as medical emergencies, home loans, and more.

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Navigating EPF Withdrawals

While the primary purpose of EPF is to provide financial security during retirement, there are circumstances under which you can withdraw from the fund:

  • Retirement: Upon reaching age 58, you can withdraw the entire EPF balance.
  • Resignation or Unemployment: If you remain unemployed for two consecutive months, you can opt for a complete withdrawal after a waiting period.
  • Partial Withdrawals: EPF allows partial withdrawals for purchasing a house, higher education, medical treatment, or marriage.

What are the Objectives of EPFO?

The EPFO’s key goals are listed below:

  • To guarantee that each employee has a single EPF account.
  • Easy facilitation of compliance is necessary.
  • Ensure that businesses consistently abide by the rules and guidelines established by the EPFO.
  • To make changes to their infrastructure and assure their internet services’ dependability.
  • For simple online access to all member accounts.
  • Settlement times for claims will be cut from 20 days to 3 days.
  • Fostering and encouraging obedient obedience voluntarily.

How to Check Your Employee Provident Fund Balance

Keeping track of your EPF balance is essential to gauge your savings progress. Fortunately, the process has become more convenient with the advent of technology:

  1. EPF Portal: You can visit the official EPF portal and log in to your account to view your balance and transaction history.
  2. SMS Service: EPF offers an SMS service where you can send a text message with your Universal Account Number (UAN) to receive your balance details on your phone.
  3. Missed Call Service: Give a missed call to the designated number after linking your UAN to your mobile number for instant balance information.

EPFO Portal Login

The first step in logging in to the EPFO portal is the activation of UAN. This can be easily done on the EPFO portal.

After UAN Login, the following activities can be done:

  • You can download the UAN Card and passbook
  • View the status of PF linking
  • View member IDs
  • View the status of the PF transfer claim
  • Edit personal details on the EPFO portal
  • Update KYC information

Employees can log in to the EPF member portal using his/her UAN and password. Employers can also login to the website using the permanent login ID and password.

FAQs about Employee Provident Fund

Can I withdraw my EPF before retirement?

You can withdraw your EPF balance partially before retirement under specific circumstances like medical emergencies, purchasing a house, or higher education expenses.

What happens to my EPF when I switch jobs?

You can transfer your EPF balance from your previous employer’s account to the new one when you switch jobs. This ensures that your savings continue to grow without disruption.

Is EPF taxable upon withdrawal?

If you withdraw your EPF balance before completing five years of continuous service, the withdrawn amount is subject to taxation. However, if you withdraw after five years, the amount becomes tax-exempt.

How is EPF different from the National Pension Scheme (NPS)?

While EPF and NPS are retirement-focused savings schemes, they differ. EPF is mandatory for employees in specific sectors, with contributions from employees and employers, whereas NPS is open to everyone and allows more flexibility in investment choices.

What is the Employees’ Provident Fund Organization (EPFO) role?

EPFO is a government body responsible for managing and regulating EPF contributions and funds. It ensures transparency and proper administration of the EPF scheme.

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Employee Provident Fund is more than just a retirement savings scheme; it’s a cornerstone of financial security for employees. With mandatory contributions from employees and employers, EPF paves the way for a comfortable retirement. By understanding its components, benefits, withdrawal options, and the role of the EPFO, you can make informed decisions to secure your financial future.



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