The Provident Fund (PF), which is compulsory for employees earning a monthly PF contribution of at least Rs 15,000, is commonly regarded as an investment choice aimed at retirement savings.
According to Section 80C of the income tax act, employees enjoy income-tax exemption on PF contributions up to Rs 1.5 lakh in a financial year. The Employees’ Provident Fund Organisation (EPFO) offers several additional advantages to its members. Let’s explore nine benefits of PF account.
If you’re a subscriber of the Employee Provident Fund (EPF), you can now enjoy the advantage of free insurance coverage up to Rs 7 lakh in the unfortunate event of death during your service period. This coverage is made possible through the Employees’ Deposit Linked Insurance (EDLI) scheme. Recently, in May, the insurance benefits provided by the EDLI scheme were improved and made more flexible. The maximum amount of insurance benefit has been raised from Rs 6 lakh to Rs 7 lakh, offering greater financial security to beneficiaries.
EPF Account holders are eligible for a lifelong pension scheme known as the Pension Scheme 1995 (EPS). Under the Employees’ Pension Scheme (EPS) of 1995, a minimum monthly pension of Rs. 1,000/- has been mandated for pensioners starting from 01.09.2014. This ensures that pensioners receive a basic level of financial support through the Employees’ Pension Scheme (EPS), 1995.
The Employees’ Provident Fund Organization (EPFO) permits partial withdrawals under specific circumstances. These include situations like a medical emergency, repayment of a home loan, construction or purchase of a new house, renovation of an existing house, and funding the wedding expenses of children or oneself.
In the process of building a provident fund (PF), both the employer and the employee play a role in contributing funds. Typically, the employer contributes 12% of the employee’s basic salary and dearness allowance, matching the employee’s contribution. This joint effort fosters the rapid growth of the PF fund.
This savings scheme provides a tax exemption opportunity to individuals who hold an EPF (Employee Provident Fund) Account under Section 80C of the Income Tax Act.
In case of a financial emergency, an EPF member has the option to obtain a loan with a minimal interest rate of 1%. However, this short-term loan must be repaid within 36 months from the time it is disbursed. The interest rate on employees’ provident fund (EPF) deposits reached its lowest level in four decades on March 12, standing at 8.1% for the 2021-22 fiscal year compared to the previous year’s 8.5%. This represents the lowest interest rate on employee deposits towards their retirement fund since 1977-78, when it was 8%. The Central Board of Trustees (CBT), headed by Union Labour and Employment Minister Bhupendra Yadav, recommended the 8.1% interest rate during its meeting in Guwahati, according to a statement from the Ministry of Labour.
Provident Fund (PF) accounts in India allow for portability, allowing workers to move their PF balance when changing jobs. This system makes sure that people can keep their PF savings without opening additional accounts. The Universal Account Number (UAN) is essential for streamlining the transfer process and making it simple to track the PF balance. Employees can easily carry over their PF savings with the help of this mechanism, which encourages financial stability and removes the hassle of managing multiple PF accounts.
Online portals and mobile applications have been introduced by the Employee Provident Fund Organisation (EPFO) to give workers easy access to and control over their PF (Provident Fund) accounts. Employees may easily check their account balance, download statements, and follow the status of their claims thanks to these services. Employees will find it simpler to be informed and in control of their financial advantages thanks to this initiative’s promotion of transparency and simplification of PF accounts’ general operations.
The Public Provident Fund (PF) in India provides contributors with a guaranteed rate of return on their investments. Annually, the Employees’ Provident Fund Organization (EPFO) declares an interest rate that is typically higher than the interest rates offered by banks for savings accounts. This ensures that the PF fund grows steadily over time.