What Is Employee Provident Fund?

The Employees' Provident Fund (EPF)  is a retirement savings plan for employees in India. It was established by the Employees' Provident Fund Organization (EPFO). The primary objective of EPF is to provide financial security to employees after retirement. Employees can contribute a certain percentage of their salary to the EPF account, which the employer matches. The funds in the EPF account earn interest and can withdraw upon retirement or when an employee leaves the organization. Types of EPF: 1. Voluntary Provident Fund (VPF): VPF is an additional employee contribution to the EPF account. VPF contributions are eligible for tax deductions. 2. Public Provident Fund (PPF): The Public Provident Fund (PPF) is a long-term savings scheme offered by the government of India. Contributions to PPF are eligible for tax deductions. 3. Employee Pension Scheme (EPS): EPS is a pension scheme for employees of the Government of India and provides a pension to the employee upon retirement. 4. Employees' Deposit Linked Insurance Scheme (EDLI): EDLI is a life insurance scheme offered by the EPFO. The employer and employee contribute a certain percentage of the salary to the EDLI account. The employee is eligible to receive a lump sum in case of death or disability.

Understanding What is Employee Provident Fund is very crucial for every working person today. Employees' Provident Fund- Employees' Provident Fund (EPF) is a compulsory retirement savings scheme, which is managed by the Employees' Provident Fund Organization (EPFO). The employee does not need to go anywhere to open it. A PF account is opened for an employee when he/she joins an organization for the first time. In this, the company deducts 12 percent of the basic salary of the employee every month and deposits it and he also puts a maximum of 12 percent in the PF account of that employee. Annual interest is paid on this entire money.

  What is the Employee Provident Fund contribution?  

The contribution of 12% of the company includes 3.67% EPF and 8.33% EPS.

The contribution made by the employee goes entirely to the Provident Fund of the employee.

10% EPF share is valid for organizations/companies where 20 or less than 20 employees are employed or whose loss (at the end of the financial year) is equal to or more than their net worth or who have been declared sick by the Industrial and Financial Resolution Board. (Sick) has been declared.

In addition to the above contribution, an additional 5% is paid by the company towards EDLI.

The company bears the fixed administrative cost at the rate of 1% for EDLI and 0.01% for EPF. This means that the company will have to contribute a total of 13.61% of the salary for this scheme.

  What is Employee Provident Fund Act and its Types?  

The Employee Provident Fund Act was introduced for the first time in the year 1952. Then later new acts were introduced in 1976 and 1995.

1. Employee Provident Fund Scheme, 1952 which was introduced to mainly offer post-retirement benefits to employees.

2. Employee Pension Scheme, 1995 which was introduced to mainly offer superannuation pensions and retirement pensions to employees.

3. Employee Deposit-Linked Insurance Scheme, 1976 which was introduced to offer insurance benefits to employees.

 

I hope this explains what is employee provident fund is to you.

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