Employees’ Provident Fund or EPF is a scheme managed by the government that promotes savings for professionals employed in the service sector. Under this scheme, the employee has to pay a certain amount of money towards the scheme. The employer also contributes the equal amount and the interest is paid on both employee’s and the employer’s contribution. There is very little information available regarding EPF and its services. Employees have a lot of confusion regarding their contribution, interest earned and withdrawal options under the EPF scheme. Let us understand and get to know about some of the basics about the EPF scheme.
Universal Account Number (UAN) is a unique number allotted to every member of the EPFO. All member IDs allotted to the employee by different establishments for which he has worked are linked with his UAN. This facility will help the employee to view all member IDs at one place. When the employee joins a new organisation, he has to provide his UAN to the employer so that the new PF account is linked with the UAN. It will help in withdrawing funds and transferring PF accounts quite easily.
2. EPF Contribution
Both the employee and the employer contribute towards the EPF scheme equally. The employee pays 12% of the combined total of basic pay, dearness allowance and retaining allowance. Here, only a part of the employer’s contribution is sent to the EPF account whereas 8.33% of the employer’s contribution is directed towards the Employees’ Pension Scheme. This rate is applicable for establishments having more than 20 employees. In case the employee works in an organisation having less than 20 employees, the contribution for both parties is 10%.
Read About: All You Need to Know About EPF Contributions
3. EPF Interest Rate
The interest rate offered by EPFO to employees is currently 8.55%. The Ministry of Labour and Employment has reduced the interest rate for the current fiscal by 10 basis points. The Ministry of Labour and Employment analyses the scenario and decides the interest rate provided to members for the next financial year. The interest is calculated on the basis of monthly running balance of the employee.
4. EPF Auto Transfer
When an employee switches a job, the new organisation opens a new PF account for him. The employee has to then transfer the fund from his previous EPF account to a new one. Form 13 had to be filled for transferring the amount into the new PF account. However, EPFO has made provisions through which the member has to fill a composite form 11 for transferring the PF automatically into the new PF account.
5. Online Facilities
EPFO has eased the method of availing various services by EPF members. Users can simply login to their EPF account using their UAN and avail a number of services such as EPF withdrawal, fund/account transfer, KYC updating, balance enquiry, etc. The employee has to register on the EPF member portal first using his UAN and create a password. He can then login to his account to avail available online services. All online services are free of cost and the employee can access them 24 hours a day. However, it is mandatory to submit PAN and Aadhaar before applying for an online claim or withdrawal.
6. EPF Withdrawal
EPFO has made provisions for its members to claim their money from PF accounts online. As per the new rules, EPFO has made it compulsory for all to file claims online when the withdrawal amount exceeds ₹ 10 Lakhs. Amounts less than ₹ 10 lakhs can be claimed both online as well as offline. In order to file claims online, the member has to first get his KYC documents (Aadhaar and PAN) digitally signed by the concerned authorities (in this case, UIDAI and Income Tax Department respectively). A member can apply for withdrawal by filling forms 31, 19 and 10C.
7. Availing EPF services using the UMANG app
The government has made provisions for employees to avail various services related to EPFO through the Umang app. The app provides both employee-centric as well as employer-centric services. Various other services such as locating establishments, EPFO offices, tracking claim status, account details via SMS, etc. can also be availed using the Umang app. In case you have any query, you can avail the facility of the live chat option provided by the organisation through the app. Member employees can also seed their Aadhaar number with their UAN through the app.
8. Paperless New Company Registration
Organisations with 20 or more employees fall under the supervision of EPFO. In order to open such a company, the hard copy of Form 5A along with all other required documents had to be submitted in a nearby field office. The system was applicable in case of the change in ownership of establishments as well. But now, employers can update form 5A online after e-signing it thus reducing the excessive paperwork and the need to visit the EPFO field offices.
9. Integration of Centralised Payment System NPCI
EPFO has decided to integrate the National Payments Corporation of India (NPCI) payment platform with its interface. This step would ensure that the process of fund transfer becomes more convenient and transaction charges would also come down. Also, EPFO will be able to transfer funds to beneficiaries on the same day.
10. Employees’ Provident Fund Advances
The primary aim of EPF is to provide a substantial amount of money to the employee at the time of retirement. However, EPFO allows users to withdraw funds before retirement as well. Such amount withdrawn is known as EPF Advances. The fund can be withdrawn for following reasons – buying a new house, repaying your home loan, medical requirements, and marriage of children or their education. The amount of money that would be disbursed depends on some specific criteria such as number of years in service, etc. It is not necessary to repay the amount withdrawn. If you have seeded your Aadhaar and PAN already with your UAN, you can fill the form online at the EPF member portal and withdraw your amount without taking approval from your employer.