What is Employee Provident Fund or EPF?

Employee Provident fund or EPF is a fund made up of contributions by the employee during the time he has worked, along with an equal contribution from the employer. It is a calculated as a percentage of employee’s salary (Basic Salary+DA+Retaining allowance), normally 12%, and returned upon retirement. In the absence of any social security cover for the elderly in India, employee provident fund not only provides monetary security and helps them meet daily living expenses, it also helps them live a life of dignity and respect after retirement.

Go directly to: How to calculate provident fund in india | EPF Interest Rate | | Provident Fund Balance | EPF Withdrawal Status |

Is contribution towards Employee Provident Fund optional in India?

All industries and establishments employing more than 20 people are required to contribute towards Employee Provident Fund (EPF). You can calculate approximate amount in your Employee Provident fund at present using the provident fund calculator below .

Benefits of Provident Fund

Apart from being a tool for our retirement savings, Provident Fund offers numerous more benefits:

• PF entitles your to get Pension

As you must have seen in provident fund calculator above, 8.33% of employer contribution goes towards pension.

• Employee Provident Fund in India provides you insurance too – 0.5% of your montly basic pay goes towards providing you insurance. The insurance cover is maximum of –
  1) 20 times the average monthly wage (maximum of Rs 6500) – which comes to Rs 1,30,000
  2) Full amount in your PF account up to Rs 50,000 and 40% of balance amount.

Checking Provident Fund Balance Online

Thanks to initiatives by PF Department, provident fund balance can now be checked online (although currently data is available for a few locations only). Know more about checking provident fund balance online.

Withdrawal from Provident Fund

Premature withdrawal of the full amount of provident fund is allowed under following conditions:

• In case the of massive retrenchment in the organization, and employee being unable to find a job even after 60 days of leaving previous job, he can withdraw his provident fund.
• On migration from India to abroad for permanent settlement or for taking employment abroad.
• In case the employees of current establishment are transferred to another which is not covered under the Act.

Partial withdrawal of Employee Provident Fund in India

A person who is a member of Employee Provident Fund can withdraw money upon reaching the age limit prescribed by the government, as of now, it is 55 years in India, or upon actual retirement. Additionally provident fund may be withdrawn partially to meet expenses such as –

• Marriage of self, siblings or children
• Medical treatment of self or family
• Construction or Purchase of house or flat/site or plot
• Repaying of housing loan
• Repairs to an existing home

To know about finer details of partial withdrawal click here.

Please Note:

With effect from 1st April 2011, in case no contribution has been made in employee provident fund for 36 months, it will be identified as inoperative and no interest will be credited in such accounts.

Source – EPF India;ET Wealth, Feb 7 2011 Edition