basics of employee pf

8/10/2019 Basics of Employee Pf

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- Charan & Shiwang

Basics of Employee ProvidentFund


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EPF

A provident fund is created with a purpose ofproviding financial security and stability to elderly

people.

Generally one contributes in these funds when

one starts as employee, the contributions are

made on a regular basis (monthly in most

cases).

Itspurpose is to help employees save a fraction

of their salary every month, to be used in an

event that the employee is temporarily or no

longer fit to work or at retirement.

The investments made by a number of people /em lo ees are ooled to ether and invested b a


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EPF

A provident fund is created with a purpose ofproviding financial security and stability to elderly

people.

Generally one contributes in these funds when

one starts as employee, the contributions are

made on a regular basis (monthly in most

cases).

Itspurpose is to help employees save a fraction

of their salary every month, to be used in an

event that the employee is temporarily or no

longer fit to work or at retirement.

The investments made by a number of people /em lo ees are ooled to ether and invested b a


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EPS

Emp loyee Provident Fund (EPF)isimplemented by the Employees Provident Fund

Organisation (EPFO) of India. An establishment

with 20 or more workers working should register

with EPFO.

Typically 12% of the Basic, DA, and cash value of

food allowances has to be contributed to the EPF

account.

EPFO is a statutorybody of the Indian

Government under Labour and Employment

Ministry. It is one of the largest social security

organisations in the world in terms of members

and volume of financial transactions undertaken.
http://www.merriam-webster.com/dictionary/statutoryhttp://www.merriam-webster.com/dictionary/statutory


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EDLIS - Employees Deposit Linked

Insurance Scheme (EDLIS)

Under the EDLI scheme life insurance cover isprovided to the PF members. The cost of thescheme is borne by the employer but as theamount of life coverage under this statutory

scheme is very low (a maximum amount of Rs.60,000), usually employers opt out of the EDLIscheme by going for group insurance schemewhich usually provides higher coverage toemployees without any increase in cost to the

employer. EPF, EPS and EDLIS are calculated on Basic

salary, Dearness allowances(DA), cash value offood concession and retaining allowances if any.

Most of the organizations follow Basic+ DA


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Rates of contribution of EPF, EPS,

EDLI, Admin charges in India.

Note : In industries like beedi, jute, guar gum factories, coir

industry (other than spinning sector) the Employee contribution is

10% while employerscontribution is 1.67%.


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Changes September 2014 The statutory wage ceiling under the EPF, EPS and

EDLI has been increased from INR 6,500 to INR15,000 per month.

For the financial year 2014-15, the minimum pensionis fixed at INR 1,000/ month for the members of theEPS or their nominee/ widow, etc.

Effective September, 1, 2014, all new EPF membersshall not become a member of EPS, if their pay ismore than INR 15,000/ month at the time of joining. In

other words, no allocation towards pension fund willbe made for such new members and the entireemployee and employer contribution will go to theprovident fund account.

The insurance benefit under the EDLI has been

increased by 20% in addition to the existing

basics of employee pf

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