Common FAQs for EPFO
Table of Contents
All salaried workers in India are required to have Universal Social Security Coverage through the Employees' Provident Fund Organisation (EPFO), one of the biggest social security organisations in the world. A total of 12% of the employee's base pay is contributed by both the company and the employee. Upon retirement, the employee receives a lump sum payment plus interest. To know more about some common FAQs for EPFO, read on.
What Exactly Is EPF?
The purpose of the Employee Provident Fund is to pay out lump sum payouts to employees upon their departure from their workplace. Unlike pension plans, which would include combined lump sum and monthly pension distribution components, this is different. Under the EPF programme, employees save a portion of their paycheck each month. It is an excellent platform for employees to save money from their paychecks in case of an emergency or when they retire. The law mandates that all employers with more than 20 workers register with EPFO.
What IS EPF Contribution?
Under the EPF programme, both the employer and the employee contribute equally to the programme. After retirement, the employee receives a lump sum payment that includes both their own and the employer's contributions, together with interest. 12% of the employee's base pay is the amount that both the employer and the employee must contribute. In spite of the fact that the employee contributes the full 12.3% of their salary to their EPF account, 8.33% of the employer's 12.3% contribution is instead transferred to the employee's EPS account. 3.67 percent from the employer's side is left over and goes into the employee's EPF account.
How Does The Calculation For EPF Take Place?
Compound interest on the sum given to the employee as of April 1st of each year is decided upon by the government and Central Board of Trustees. Although donations are made on a monthly basis, the interest is computed annually. Each year, there is an opening balance for the staff.
What Happens If PF Is Not Paid?
Deduction of PF becomes compulsory and inevitable when a firm has 20 or more employees who receive salaries (basic + dearness allowance). If the aforementioned requirements are satisfied, participation is not someone's option. Rather, it is required by law and is therefore mandatory.
What Are Some Common FAQs Under EPFO?
Following are some of the common FAQs under EPFO -
1. How much do the employer and employee each contribute to the provident fund?
- Both the employee and the employer both contribute 12% of the employee's basic salary.
2. Which paperwork must be completed in order to join the provident fund?
- To join the Provident Fund, Nomination Form No. 2 must be completed; forms can be obtained from the HR department.
3. What is the policy of the plan about a member's nomination?
- To be eligible to collect the money held to his credit in the fund in the case of his death, each member must submit a nomination. If he has a family, he must suggest one or more family members and no one else. If he doesn't have a family, he can nominate anybody or anything he wants, but if he later gets married or has children, that nomination is nullified and he must make a new one of one or more family members. According to the Acts, you cannot nominate your brother.
4. How would I find out how much money has accumulated in my pension fund?
- The employer receives an annual statement from the PF office that contains information on the PF accumulations. The statement includes information on the PF account's opening balance, annual contributions, withdrawals, interest earned, and closing balance. After the fiscal year is over, the PF department sends this statement.
Endnotes
A non-constitutional organisation called the Employees' Provident Fund Organisation (EPFO) encourages workers to save aside money for their retirement. Both Indian and foreign workers are covered by the organisation's programmes.
Also read: How Do Pension Plans In India Function?
