What is the employee provident fund?
Employee Provident Fund Organization (EPFO) is a statutory body under the Ministry of Labour and Employment, Government of India. It was established on 1 April 1952. It provides retirement benefits to its members who are employed in establishments covered under the EPF Act. With the introduction of things like epf e seva government is really trying to make the provident fund services more accessible to people.
The EPFO provides two types of provident funds to its members:
Employee’s Provident Fund (EPF) : This is an employee’s savings scheme which has a provision for contributions by employers and employees. The EPF corpus accumulates with interest at a rate of 8% per annum and is used to provide retirement benefits after the completion of 5 years of service.
Seniority-cum-family pension scheme: This scheme also provides retirement benefits for employees but unlike EPF, it does not contribute to employee’s savings but only pays out Rs 2,500 per month as a monthly family pension after completing five years of service.
Objectives of EPFO
- To ensure adequate and fair benefits for members by providing them with an assured minimum monthly income during their productive life.
- Every person has an EPF account for their own benefits, irrespective of their tenure of employment, age and other factors which affect the amount payable.
- To maintain an efficient and effective system for the determination of contributions and benefits under the Scheme; and
- To provide a safe and secure financial infrastructure for social security purposes by providing life insurance, retirement annuities and other facilities to its members.
- To provide financial security to workers who do not have other sources of income and to enable them to live with dignity and self-reliance.
- To ensure every employee has an EPF account and that no worker is denied his pension rights due to non-compliance by any employer.
- The objectives of the Employee Provident Fund Organization (EPFO) are to promote growth in the economy through investments, achieve financial stability and provide risk management facilities.
- The EPF contributes to the social as well as economic development of the country. The contribution made by employees towards their provident fund accounts forms an essential part of their contribution towards social security.
- To protect the interests of members in case of employer insolvency or bankruptcy, etc.; and
- To provide a convenient and efficient channel for the payment of provident funds by employers to their employees. The convenience of different provident fund-related processes is visible from the fact how easily you can correct your name by filling in the simple pf name correction form in no time.
Schemes offered under EPFO?
Some of the most prominent schemes offered under EPFO include:
- Employees Provident Funds Scheme 1952 (EPF)
The EPF is a provident fund scheme which provides for an assured return on the accumulated balance in the employee’s account. The EPF Act, 1952 provides that contributions to the Fund shall be made by employers and employees, through payroll deductions. The EPF shall be managed by a Board consisting of two members each from the Government, employer and employee. The board has certain powers to manage the Fund on behalf of its members.
- Employees’ Pension Scheme 1995 (EPS)
The EPS was introduced with effect from 1 July 1995 to provide lifelong pension benefits to employees who had worked for at least 5 years in public enterprises or companies having at least 25 workers as on 31st March 1995, irrespective of whether they were government servants or not. The Employees’ Pension Scheme came into being with effect on 1 June 2004 replacing the earlier Centralised Pension Scheme (CPI).