Employees’ Provident Fund Organization (EPFO) – An Introduction
The Ministry of Labour and Employment, Government of India introduced Employees’ Provident Fund on 15th November 1951. In the following year, the EPF Act 1952 came into existence in place of the Ordinance. In present time, this act is well known as Employees’ Provident Funds and Miscellaneous Provisions Act 1952. The Organization that handles all aspects of Provident Fund Scheme in whole India is named EPFO – Employees’ Provident Fund Organization. The EPFO guides the Central Board of Trustees to manage Provident Fund, Pension Scheme, Insurance Scheme etc.
The Employees’ Provident Fund Organization is an authorized association that assists Employers as well as Employees of India in Provident Fund and other related issues. The role of EPF Organization is to provide a Universal Account Number to the Employee for Provident Fund Account. The EPFO has declared earlier that Any Company, Factory or Establishment which has more than 19 working employees, is bound to implement Employees’ Provident Fund Scheme. The Act of EPF & MP is constituted by Government of India for the benefit of every employee of the country.
Employees’ Provident Fund Organization (EPFO)
The Government of India is focusing on improvement of financial security of every employee. That is why there is at least one office of EPFO availed in each state of India. The Employees’ Provident Fund Organization has almost one hundred and twenty two (122) Regional EPF Offices across all over country. The EPF Organization is also having EPF Training Institutes in all zones across India which hold sessions and seminars for Employees, Employers as well as their Representatives.
The Employees’ Provident Fund Organization is established for interest of every Employee of country. The Government of India wants to give financial security to every citizen who is an Employee of any company or factory. When an Employee completes 58 years age, he/she gets retired as per rules. The Provident Fund, Pension Fund benefits are helpful to the Employee after retirement from service, while Insurance Fund is useful for survival of Employee’s family after his/her death.
The Central Board of Trustees, EPF Organization operates three main schemes which are presented below:
- The Employees’ Provident Funds Scheme 1952 (EPF)
- The Employees’ Pension Scheme 1995 (EPS)
- The Employees’ Deposit Linked Insurance Scheme 1976 (EDLI)
The above mentioned schemes can be described in details as follows__
01. The Employees’ Provident Funds Scheme 1952
The EPF Scheme has been launched by Ministry of Labour and Employment with a purpose to secure Life of an Employee and his/her family. Provident Fund is combination of a part of Employee’s monthly salary and Employer’s contribution. As per EPFO Rules, every establishment having higher than 19 working employees, must register itself with Employees’ Provident Fund Organization. The Employee and Company both contribute 12% of Employee’s monthly salary (Basic Pay plus Dearness Allowance) towards Provident Fund Account.
At the end of employment period, when an Employee retires, he/she will receive the total amount of Provident Fund together with Interest. The Employees’ Provident Fund Scheme can be updated when the Employee changes Job from one company to another company. The Employee can also withdraw part of Accumulated Provident Fund for some specific expenses such as construction of house, marriage, medical illness and higher studies education etc.
The Provident Fund can be claimed by the Employee at the time of Retirement and Resignation. In case of death of Employee, the Nominee should claim Employees’ Provident Fund from EPFO. There is also benefit of Interest to be given on accumulated Provident Fund amount. The Rate of Interest at present is 8.75% per annum on PF.
02. The Employees’ Pension Scheme 1995
The EPS Scheme came into existence by EPF Organization. The main aim of Pension Scheme is to provide benefit of monthly income after Superannuation, Retirement, Disablement and Death of the Employee. Before introduction of Employees’ Pension Scheme, the Employee was covered under the Family Pension Scheme 1971. In order to get benefit of Pension, the Employee must have worked for not less than ten (10) years after registration of Employees’ Pension Scheme at EPFO.
In creation of Pension Fund, the Employee does not contribute any amount out of his/her salary. The Pension Scheme is for the benefit of Employee but it is funded by the Employer (i.e. 8.33% of Employee’s monthly salary, maximum Rs.1250/-). The Employee is eligible to receive Monthly Pension only after his/her age is reached at least 50 years. Generally, every company or establishment gives Retirement to an Employee at the Age of 58 years.
But when it is matter of death of Employee, the widow or widower is eligible to get Pension on regular basis irrespective of age of Employee at the time of death. In case the Employee becomes Disabled (Permanent Disability), he/she can get Monthly Pension under EPS Scheme. To receive the benefit of Pension Scheme on Superannuation of Employee in Age of 50 to 58 years from Job Service, the candidate should not be in Service.
03. The Employees’ Deposit Linked Insurance Scheme 1976
The EDLI Scheme was issued in the year 1976 with an aim to provide financial help to the nominee of Employee. The Deposit Linked Insurance is made by combined contribution of Employer and Central Government. The Employee is not charges a penny for this scheme. However, the EDLI Scheme benefit is to be given to the Employee’s nominee or family on death of Employee. There is only one condition that the Employee must be a member of EDLI Scheme at the time of death otherwise no benefit will be given to his/her family (nominee).
The nomination which is selected by the Employee under Provident Fund Scheme, the same will be applicable to Employees’ Deposit Linked Insurance Scheme. The Employer’s contribution should be deposited on monthly basis and the Central Government contributes at the end of each financial year. The amount of contribution towards Insurance Fund is calculated based on Employee’s monthly earning i.e. wages, dearness allowance etc. On death of Employee, the nominee is eligible to get Insurance Fund Remittance up to 03 lakh rupees (maximum) and additional 20% of the Benefit Amount should also be paid.
OLRE – Online Registration of Establishments:
The Employees’ Provident Fund Organization facilitates Online Registration of Establishments which are willing to register for PF Scheme. The Registration Process has been revised from 1st December 2015 and the new Employers (of company, factory etc.) must follow the New Procedure. This facility is initiated to make the allotments of Provident Fund Code easier across all over India. The Employer is required to produce Digitally Signed Documents at the time of Online Registration of Establishment. During the registration and before allotment of PF Code, the EPFO will verify PAN Number of Employer.
As per EPFO Guidelines, the following Employers (Establishments) are eligible to register online for Application to get PF Code Number
- The Establishments on which Employees’ Provident Funds & Miscellaneous Provisions Act 1952 is applicable.
- The Establishments on which the EPF & MP Act does not apply, but the Employer, with consent of majority of Employees, voluntarily wishes to implement the scheme.
- The Establishments who already have a PF Code Number, still the Employer wants a separate code for a new branch unit for administrative convenience.