EPFOemployees’ Provident Fund Organization has increased the interest rate on the EPF by 8.65% for the current financial year. Earlier, the rate was 8.55 percent. With this decision, employees working in the private sector will get much benefit on retirement. After interest rates increase, investing in EPF will give more retirement fund than PPF.
NEWS – (February 2019)
What Are The Features Of EMPLOYEE PROVIDENT FUND?
- The Employees Provident Fund (EPF) applies to any company that has 20 or more employees.
- For employees with a salary of Rs 15,000 or less, it is mandatory to invest in the EPF.
- Under this scheme, 12% of the basic salary of the employee will be invested in PF.
- The company will also invest in the PF with the same portion.
- The amount invested in the PF will get deduction under Section 80C.
15.67% goes into the EPF, 8.33% in the Employees Pension Scheme (EPS), 0.5% for Employee Deposit Insurance (EDLI), 0.85% for the EPF Administrative Charge and 0.01% in the EDLI Administrative Charge
Provident Fund (PF)
15.67% of the deposited amount is invested in PF, which is transferred to a trust managing the PF. Total fund is formed by combining the accumulated fund and interest amount.
PF can be removed at the time of retirement, termination or change in job. The money of PF will be tax-free. if it has been withdrawn after 5 years of service.
Employee’s Pension Scheme (EPS)
If an employee retires at the age of 58 after serving 10 years or more then he will be eligible for the pension, whose calculation will be from the formula given below.
X = A * B / 70 (where X = Monthly Pension, A = Pensionable Salary, B = Pension Service)
On the death of the member, the family (who is a husband or wife and then 2 children below the age of 25) has the right to receive monthly family pension.
If he retires at the age of 50 after giving service of 10 years or more, he can opt for early pension, but the amount of pension will be 4% less every year, before taking the age of 58 years.
Employees’ Deposit Linked Insurance (EDLI)
This is a social security plan, which provides insurance cover to save the family of employees after hardship, after the death of an employee during service.
Based on the employee’s last salary (Basic Plus DA), the amount of death claim under EDLI is calculated on 30 times more than the salary after joining the bonus. The sum assured will be Rs. 6 lakh.