FAQ on Provident Fund

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What is Provident Fund ?

1. Provident Fund and Miscellaneous Scheme Act was made an Act in 1952 as a social Security measure.
2. It contains three benefits:

• Provident Fund
• Family Pension
• Employees’ Deposit-Linked Insurance Scheme (EDLI)

3. Employees and employers contribute equally for PF and Family Pension, while EDLI is administered out of contributions made by Employer only.

4. Provident Fund is a compulsory saving.

5. It is applicable for all organizations having 10 or more employees using power and employees drawing basic salary including Dearness Allowance up to Rs.6500/- per month.

6. It has contribution from employer and deductions from employees salary

7. Employers contribution is 12% where as employee has the option of contributing more as voluntary PF.



What Happens to the Contributions?

1. Employee’s Contribution : 12% of Basic is deducted from employees’ earning every month and deposited in the PF Account.

2. Employer’s contribution : 12% is split and deposited as :

• 8.33% in the Pension Fund
• 3.67% in the Provident Fund along with
• Employees’ share of 12%

3. Employers & employees contribution to PF along with interest is accumulated in the PF account and the same can be viewed in the Annual return & reconciliation statement issued by the PF authorities every year for the period 1st April to 31st March, around June / July.

4. The total amount is transferred to PF Account number of individual employee. PF Account number is reflected in the Pay slip.

5. The PF account is maintained either with Regional Provident Fund Commissioner (RPFC), an authority under Act, or PF Trusts set up by organizations duly approved by PF and Tax Authorities.

6. The total deposit earns interest on closing annual balance. The rate of interest is decided and declared by EPFO, Ministry of Labor, Govt. of India on an annual basis. The rate of interest will be same across the country and companies.



Withdrawal & Transfer:

Withdrawal & Transfer of Accumulations:

1. Total deposit together with interest under Provident Fund can be withdrawn on meeting conditions of retirement or migrating overseas or not working for a specific duration by submitting Form 19 at old organization or can be transferred to new organization by filling up Form 13 and submitting it to new organization.

2. Employees get pension under Family Pension Scheme on attaining the age of retirement and nominees get the pension on expiry of member for life or attaining certain age.

3. In the event of death of the member covered under the act, the dependant family gets an insurance amount.

4. The accumulation is in the name of employee and it is his/her money. Employee receives an annual statement of accumulations and interest earned from RPFC or EPF Trust, as the case may be.



Where do we maintain our PF Account

1. Organization has to register with Regional Provident Fund Commissioner (RPFC).

2. All employees have a unique account number with the RPFC. The employee’s PF account number is reflected in Payslip.

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[PolicyWala]

3. Account is maintained with a State Bank of India branch. SBI and its subsidiary banks also open accounts.

4. You will have to fill up a form and attach a photograph. If you want to download the form or take a look at it, you can do so on the SBI web site.

5. If you do not have a Permanent Account Number, you will have to furnish an attested copy of either your ration card, voter's identity card or passport.

You can have only one PPF account in your name. If at any point it is detected that you have two accounts, the second account you have opened will be closed, and you will be refunded only the principal amount, not the interest.

7. You cannot open a joint account with another individual. The account can only be opened in one person's name.

8. You are free to nominate one or more individuals. On the death of the account holder, nominees cannot keep the account going by making contributions. If there are no nominees, the legal heirs get the money.

9. An individual can open one account and others for his/her children or*minor of whom s/he is the guardian. But, on his/her death, the minors or children cannot make any additional contributions.

10. Non-resident Indians earning an income in India and wanting to take advantage of the rebate can also open an account. Subscriptions, however, will have to made from their Non-Resident Ordinary (NRO) account on a non-repatriable basis.