Employee Providend Fund (EPF) Hidden Facts Which Common Man Does Not Know

5/16/12 Employee Providend Fund (EPF) hidden facts which common man does not know

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10 facts you dont know about EPF

May 14, 2012 152 comments

We all know what is EPF Employee Provident Fund. A small part of your salary (12% of your basic salary) is invested in something called EPF and an equal amount is

matched by your employer each month. This is what 95% people know about EPF. But there are many things in EPF which a lot of people dont know and this article isgoing to open some not known secrets of EPF. One should be aware about all the EPF related information. So lets take them one by one in points format.

1: You can also nominate someone for your EPF

Do you know that there is also nomination facility in EPF. The nominee will be contacted at the time of death of the person and handed over the EPF money. However if

nomination is not present (which you should check), it can raise to all sort of issues while claiming money. There is a form called Form 2 which has to be filled to change or

update the nomination. Please contact your company finance department or directly send the form to EPFO. One very strange rule as per the Act is that you cant nominateyour brother for EPF. Not sure why!

2: One can get pension under EPF

Do you know that there are two elements in EPF- one is called EPF and other is EPS. The EPF is actually for your provided fund and EPS is for your pension. The 12%

contribution from your side goes to EPF, but the 12% contribution which your employer makes, out of that 8.33% actually goes in EPS (subject to maximum of Rs 541)and the rest goes into EPF. So understand it this way, a part of your employer contribution actually makes up your pension corpus. But there are some caveats to this.

One is liable for pension only if one has completed the age of 58.

One is liable for pension only if he has completed 10 yrs of service (in case of more than one companies, the EPF should have been transferred, not withdrawn)

The maximum Pension per month is subject to maximum of Rs 3,250 per month.Lifelong pension is available to the member and upon his death members of the family are entitled for the pension.

3: No interest is given on EPS (pension part)

You must be thinking that you regularly get compound interest each year on your contribution + employer contribution. But it does not work like that. The compound

interest is provided only on EPF part. The EPS part (8.33% out of 12% contribution from your employer or Rs 541 what ever is minimum) does not get any interest. At the

time of withdrawal , you get both EPF and EPS.

4: You might not get 100% of your EPF money

Imagine your contribution + employer contribution has been total Rs 3,50,000 till date. Out of this 3,50,000 , suppose 2,50,000 has gone in EPF , and rest 1,00,000 has

gone in EPS (for pension) . Now if you quit your job in 6th year of employment and opt for withdrawal of your EPF money (EPF + EPS actually) , then do you think you

will get total 3,50,000 . NO !

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Thats because you always get 100% of your EPF part, but for EPS there is separate rule . There is something called Table D , under which its mentioned how much you

get at the time of exit from your job, there is a slab for each completed year and you get n times of your last drawn salary (depending on the completed year of service)

subject to maximum to Rs 6,500 per month. So if your salary in this case was Rs 30,000 per month, still you will be given only 6,500 * 6.40 = Rs 41,600.

Note that the table D is upto 9 yrs only, because if 10 yrs are crossed, then you are liable for pension.

5: You can invest more in EPF, its called VPF

You can always invest more than 12% of your basic salary in EPF which is called VPF. In this case the excess amount will be invested in EPF and you will keep on getting

the interest, but the employer is not suppose to match your contribution. He will just invest upto maximum of 12% of your basic, not more than that.

6: Withdrawing of EPF amount at job change is illegal

Almost every one thinks that withdrawing of your EPF amount after a job switch is totally fine and allowed, however as per law, its illegal. You can only withdraw your

EPF money only if you have no job at the time of withdrawing EPF and if 2 months have passed. Only transfer is allowed in case you get a new job and you switch to it.

While there are no cases where EPF office tracks these things and takes up this matter, still just for your information you should know that if you got a new job and took it

and then you are applying for withdrawal, its illegal as per law. However in case of EPS, if the service period is less than 10 years, youve option to either withdraw your

corpus or get it transferred by obtaining a Scheme Certificate. Once, the service period crosses 10 years, the withdrawal option ceases.

7: One can opt out of EPF if he wants

Yes!I know this might be a surprising fact for many , but if ones basic salary per month is more than Rs 6,500, he has an option to opt out of EPF and not be part of it. In

which case he will get all his salary in hand (without anything deducted every month). But the sad part is that one has to opt out of EPF in the start of his job. If a person has

been part of EPF even once in his life, then he cant opt out of it. So if you have already had EPF in your life. This option is not for you, but if you are new to job and your

EPF account number still does not exist, you can tell your employer that you dont want to be part of EPF . You will have to fill up form 11 for this.

8: Your EPF gives you some life insurance too

A lot of people might not know that in case a company is not providing group life insurance cover to its employees, in that case the employee is given a small life cover

through EPF. This is because there is something called Employees Deposit Linked Insurance (EDLI) scheme and your organisation has to contribute 0.5% of your monthly

basic pay, capped at Rs 6,500, as premium for your life cover. However companies which already have life insurance benefits to employees as part of the company, are

exempted from this EDLI scheme. The bad part of this EDLI scheme is that the life cover under this option is very low and thats maximum amount of Rs. 60,000. While

this is peanuts for most of the people in big cities. For employees in small scale industries and small cities, this amount of Rs 60,000 will still count something.

9: You can use EPF money can be withdrawn at special occasions

So now you know that EPF withdrawal is not permitted if you are still working. But there are occasions when EPF withdrawal is allowed. While you cannot withdraw it

fully, you can withdraw a partial amount. Following is a list of events when you can withdraw the EPF amount and the conditions you need to fulfil

1. Marriage or education of self, children or siblings

- You should have completed a minimum of seven years of service.

- The maximum amount you can draw is 50% of your contribution

- You can avail of it three times in your working life.

- You will have to submit the wedding invite or a certified copy of the fee payable.

2. Medical treatment for Self or family (spouse, children, dependent parents)

- For major surgical operations or for TB, leprosy, paralysis, cancer, mental or heart ailments

- The maximum amount you can draw is 6 times your salar

- You must show proof of hospitalization for one month or more with leave certificate for that period from your employer.

3. Repay a housing loan for a house in the name of self, spouse or owned jointly

- You should have completed at least 10 years of service.

- You are eligible to withdraw an amount that is up to 36 times your wages.

4. Alterations/repairs to an existing home for house in the name of self, spouse or jointly

- You need a minimum service of five years (10 years for repairs) after the house was built/bought.

- You can draw up to 12 times the wages, only once.



5. Construction or purchase of house or flat/site or plot for self or spouse or joint ownership

- You should have completed at least five years of service.- The maximum amount you can avail of is 36 times your wages. To buy a site or plot, the amount is 24 times your salary.

- Can be avail of it just once during the entire service.

10: You can file an RTI application for EPF issues

Did you know that you can file an RTI applicable to get any kind of information regarding your EPF. You can file it if you are facing issues like no clarity about balance in

your EPF, no action taken for your EPF withdrawal or transfer. To find out information about other issues on EPF. I have done a detailed post on how to file an RTI for

your EPF issue.

Tagged as: EPF

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{ 152 comments read them below or add one }

1 Sathish May 14, 2012 at 10:14 am

Nice and informative. Particularly the loan for house/flat/plot purchase which I was not aware at all!

Reply



2 NARAYANAN May 14, 2012 at 11:12 am

Dear Manish,

very nice article. True, very few no the rules of EPF. I have withdrawn twice after 9 years in two companies. I collected the money and used. Never thought offinding how much it is or as the govt given the full money etc.

Small clarification. You mention that EPS CAN BE WITHDRAWN ONLY AT AGE 58. does that mean that i can make a claim at age 58 ?

Reply

3 Manish Chauhan May 14, 2012 at 6:04 pm

Narayanan

No , mostly you got your EPS also when you withdrew !

Reply

4 NARAYANAN May 14, 2012 at 6:09 pm

Thanks Manish.

Keep up this good job.

Reply


Now you can take use of it !

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6 Ankur May 14, 2012 at 10:23 am

Manish Thanks much for this post!!!! EPF and EPS clarification was very very helpful.

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Thanks Ankur what else did you learn from post !

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8 Arun May 14, 2012 at 10:31 am

Very useful information. Thanks a lot sir.

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Thanks Arun !

Reply

10 Ronak May 14, 2012 at 10:36 am

Nice read, Manish. Very informative. Keep up the good work.

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Thanks Ronak !

Reply

12 Rachit May 14, 2012 at 10:41 am

A very good and informative article. Keep posting more.. PPF, Health insurance, Stocks, MF etc.

Reply


SUre

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14 Siva Mohan May 14, 2012 at 10:43 am

Hi Manish,

Thanks for a very informative article. I have a query.

I have not transferred or withdrawn EPF from my first employer where I worked for 2 years until 2009. I didnt bother withdrawing as I am not in need of EPF

money.

What should I do now.. transfer it to my current employers EPF account or withdraw it?

Thanks,

Siva Mohan

Reply

15 Kranti Goyal May 14, 2012 at 10:57 am

Hi,

As per current rule, In EPF if money is not deposited for continuous 3 years then account status changes to be dormant and no interest will be pay in future.

Manish you can also add this to article.

Thanks and Regard

Kranti Goyal

Reply


Thats a good point , but I think a lot of people might know this

Reply


Siva

You need to fill up form 13 and apply for transfer , after 6 months of doing so if you dont see any progress , then file RTI and get more info on thathttp://www.jagoinvestor.com/2012/03/rti-for-epf-withdrawal-or-transfer.html

Reply

18 Siva Mohan May 15, 2012 at 10:30 am

Thank you very much for the reply Kranti & Manish.

Reply

19 Santosh Prasad May 15, 2012 at 12:47 pm



Manish,

One should not wait till 6 months after submitting form-13. EPF offices are computerized now and they are supposed to get it done within 30

days(ideally). Hence after 30 days, one can file an RTI application to know about the status of transfer request.

Reply

20 Krishna May 14, 2012 at 10:49 am

Hi Manish,It was an eye opener when it comes to using your EPF for house/plot purchase. Should I repay it in case of partial withdrawl for marriage / purchase of plot/flat. And

if yes is there any interest associated with it

Reply


Krishna

Its not a loan , its a partial withdrawal , so no point of interst !

Reply

22 Sharat Trehan May 14, 2012 at 10:51 am

At the end you have written that you have done a detailed post on how to file an RTI on EPF issues. Can you possibly mail that link? Regards, Sharat

Reply

23 Vishnu Agarwal May 14, 2012 at 12:06 pm

Hi Sharat,

Please go thru the following links posted earlier:

http://www.jagoinvestor.com/2012/03/rti-for-epf-withdrawal-or-transfer.html

http://www.jagoinvestor.com/forum/how-to-apply-for-rti/1957/

Please follow up the blog by signing up thru email at top left box in the page for the future blog updates.

Regards,

Vishnu Agarwal

Reply

24 Sharat Trehan May 14, 2012 at 1:26 pm

Dear Vishnu,

Thanks for the prompt reply and the useful links.

Regards

Sharat

Reply

25 Kapil May 14, 2012 at 12:32 pm

There you go http://www.jagoinvestor.com/2012/03/rti-for-epf-withdrawal-or-transfer.html

Manish you may want to add the link to the article

Reply


Done Kapil !

Reply




http://www.jagoinvestor.com/2012/03/rti-for-epf-withdrawal-or-transfer.html

Reply

28 Dhanesh Chakraborty May 14, 2012 at 10:51 am

I worked in a private company for 10 years.. but not got any penson even not received full PF..can I have any suggestion for recoverning for pending pfRegards

DhaneshChakraborty

941126067

Reply

29 Anurag May 14, 2012 at 1:39 pm

Hi,

Pension starts after 58 yrs age of applicant not immediately. You need to interact with EPF commissioner office to get the details and reply when you reach 58yrs of age.

Rgds,

Reply


Actually it can start after 52 yrs also subject to some resitriction and condition

Reply


You need to be above 58 age , to get get pension , If you have applied for withdrawal , then you must have got the EPS money too .. use RTI to know more

about it http://www.jagoinvestor.com/2012/03/rti-for-epf-withdrawal-or-transfer.html

Reply

32 Rachit May 14, 2012 at 10:52 am

A few queries:

1. As EPS is 8.33% then let say that amount for an individual crosses Rs 541 then where the rest of the money will go.

e.g. EE Contribution: 2000 Rs /month ER contribution: 2000 Rs/ Month Now 2/3 of 2000 Rs of ER will go for Pension which is almost like 1334 Rs but asmaximum limit is 541 Rs / Month then 1334-541 = 793 Rs, where wil it go?

2. Will the compounding interest be given in baove example on: 2000 + 666 = 2666 rs OR on: 2000 + 666 + 793 = 3459 Rs

Thanks

Reply

33 Vishnu Agarwal May 14, 2012 at 12:11 pm

In my case only 541 is deposited for EPS. Rest of Employer contribution & EPF I can see in my account, and elegible to withdraw as per the conditions.

So the extra money goes into EPF account only.

Regards,Vishnu Agarwal

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34 Paddu May 14, 2012 at 1:32 pm

2000-541 EDLI if applicable = 1459 EDLI if applicable, will go to EPF.

[I noticed the discrepancy between Employee/er's contributions in my EPF account statement (that I always get 2 years(!) after the end of the financial year),



researched epfindia.nic.in & found about EPS & EDIL and I'm answering based on my EPF statement & that website.]

Reply


Rachit

If EPS thing crosses 541 , then rest will go in EPF only , EPF earns interst , EPS does not !

Reply

36 Poonam May 14, 2012 at 11:06 am

Very useful information. Thanks.

Regards,

Poonam.

Reply


Thanks Poonam

Reply

38 Pro Money Investor May 14, 2012 at 11:07 am

In many private organizations,the owners prefer collecting even their contribution from the staff salary and it is obvious that the employees can not raise their voice sothat their job itself will be at stake.

Reply


Pro

Thats part of CTC .. Nothing wrong in it . They can always tell you CTC less and then add their contribution , rather they tell you in CTC . Whats wrong inthat ?

Reply

40 Santosh Prasad May 15, 2012 at 12:53 pm

Employer contribution of 12% of basic salary is part of en employees CTC. Because, whatever employer is contributing, gets deposited in employees

name and he/she is complete owner of this amount.

Reply

41 Amol May 14, 2012 at 11:10 am

Dear Manish,

Very Informative artcile about EPF and EPS. I have been working from last five years and was not aware of this one. Thanks!

as You said withdrawing EPF is illegal and we should map existing EPF with New Company, I found that we need to take a lot of followup doing those things. I

heard from one of my friend that his earlier company did not cooperated in doing so and he has to travel many time for that. same about EPF office. Do we havefacility to transfer EPF account online?

FYI. In your Diagram you have repeated Employees Contibution instead of Employers. may be a typo:-)

Regards,

Amol

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42 Paddu May 14, 2012 at 2:30 pm



What I hear is that if your earlier companys EPF is managed by private trustees it should be easy to transfer (they might even have online transfer?).

But if it is managed by the EPF organisation (http://epfindia.nic.in), you know how difficult it is to get work done in govt. offices! As other people have said, filean RTI to get the transfer done!

Reply


Might be . I am not sure if private trustees are more efficient !

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Amol

Withdrawing is illegal if you are still employed , if you are really not having any job , you can withdraw it . Employer;s will just fill up your form and start theprocess , after that they are not suppose to and will not follow up , its not their work and not their responsibility , they are right in saying so , its between you

and govt now .

File RTI , it works in all situation : http://www.jagoinvestor.com/2012/03/rti-for-epf-withdrawal-or-transfer.html

Reply

45 sri May 14, 2012 at 11:13 am

manish,

i think there are different PF schemesam not clear about of pension and provident fund linkagecan you elaborate more mentioning the source of info please. EPSis different scheme but for PF employes has to contribute basic 8.33% and it has to be be clubbed with employees contribution.

Reply


Sri

What are you confused about . EPS is an internal thing in EPF , you can see the graph which i made and posted above

Reply

47 Pranav May 14, 2012 at 11:14 am

Thanks for sharing..

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48 Kshitij May 14, 2012 at 11:23 am

I have a query (not able to post in the forum):

I was working from Feb 2004 to Jan 2008 in Satyam, Hyderabad. I want to withdraw my PF (as I have been advised that transfer will take ages). They have given

me a affidavit as it is 3+ years since I have left that job.

So will my withdrawal be taxable (considering that if you withdraw before completing 5 years you get 30% taxed)?

Reply

49 Paddu May 14, 2012 at 1:42 pm

First withdrawing while having a job is illegal. Now, if you have no job and withdraw the amount before 5 years elaborate calculation is to be carried out

according to the IT Act Fourth Schedule (http://law.incometaxindia.gov.in/DIT/HtmlFileProcess.aspx?FooterPath=D:\WebSites\DITTaxmann\Act2010\DirectTaxLaws\ITACT\HTMLFiles\2011&DFile=schedule4.htm) Rule 9:

(i) for each of the previous years including the year of withdrawal tax benefit due to EPF has to be removed & tax recalculated,

(ii) the difference between the recalculated tax and tax actually paid in all these years will be the tax on withdrawal.

As per Rule 10 the tax has to be deducted at source before giving you the money, but I heard that usually they only deduct 10% of the tax!

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50 Paddu May 14, 2012 at 1:42 pm

Oops! Please read 10% of the tax as 10% of the withdrawal amount as tax.

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Thats really a good idea .. will you be able to give an example using some figures !

Reply


Yes .. you will be taxed and its not 30% , its actually added to your income and then taxed as per your slab

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53 Kshitij May 15, 2012 at 10:16 pm

Thanks Paddu and Manish,

Currently I do not have a job. So I guess Id better make that affidavit and fill across.

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54 Umesh Dwivedi May 14, 2012 at 11:24 am

hello ;

I did a job in a Pvt company for two years, and i have left the job from last six months.Till i dont get a job , is it possible to withdraw my EPF.What is the procedure,plz tell me.

Thanks.

Reply


Yes . its possible ,you just need to follow this http://www.jagoinvestor.com/forum/procedure-to-withdraw-epf/1011/

Reply

56 jake May 14, 2012 at 11:24 am

Nice Article Manish, this is really informative. I would like to ask one question here. I have my previous PF account which is dormant now. How do I transfer themoney from that dormant account to my present PF account?

Reply


Jake

You need to follow the procedure for transfer of EPF Fill form 13 http://www.thinkplaninvest.com/2009/02/epf-pf-transfer-and-form-13/

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58 Ganesh Balasundaram May 14, 2012 at 11:25 am

The bottom portion in the embedded figure should indicate Employer.

Reply




Changed !

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60 Sylvestor May 14, 2012 at 11:29 am

Nice Article.

More clarity is needed how pension is calculated after 58 yrs of age.

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61 PATHY May 14, 2012 at 11:52 am

Hi MANISH GOOD INFORMATION CLARITY ON PENSION CALCULATION AFTER 58 YRS

Reply


Pathy

Please post your questions in simple words !

Reply


Sylvestor

Here is the reference

Under Employees Pension Scheme, the monthly retiring pension is decided on the basis of Pensionable Service and Pensionable Salary and is worked out

as follows

Monthly pension=( Pensionable salary*Pensionable service)/70

Pensionable Salary is arrived at by considering the average contributing salary immediately preceding 12 months from the date of exit from the scheme,

normally this would be limited to Rs 6,500 p.m. unless certain enhanced contributions are made by the employer with permission. Pensionable Service is the

service in years rendered by the member for which contributions have been received maximum cannot exceed 35 years

Reference : http://www.bemoneyaware.com/blog/epf/

You can also see this article : http://www.citehr.com/74122-pension-calculator-under-epf-scheme.html

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64 Shrenik May 14, 2012 at 11:43 am

Hi Manish,

Once again very informative and useful article from your side.

Here it is mentioned that One is liable for pension only if he has completed 10 yrs of service (in case of more than one companies, the EPF should have been

transferred, not withdrawn)

The maximum Pension per month is subject to maximum of Rs 3,250 per month.

I have completed 09 years of service in one company. can you pls also elaborate on what basis amount of pension is being decided and after a year (when I

complete 10 years) is it worth for me to apply for pension or I can do that any time after completing 10 years ? Which one will give more advantage?

Once again thanks for nice and article.

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You also need to complete 58 yrs of age ! .. So if you have completed 10 yrs of service , but not of 58 yrs ,still you need to wait for pension

Reply



66 Shrenik May 16, 2012 at 4:40 pm

Thnx Manish

can you pls also elaborate on what basis amount of pension is being decided.

Reply

67 SHYAM May 14, 2012 at 11:44 am

Dear Manish,

Very -2 usefull information.

I have a query that my basic salary is 6500.00 and my total contribution is for 20 year How much pension amount i will get on retirement.

Thanks

Shyam

Reply


Shaym

There can be changes in between .. You can search more on the formula on EPF pension calcualtion

Reply

69 Deep Vineet May 14, 2012 at 11:46 am

Nice Article Manish, will it be possible for you to add the information about the calculation of interest part, also a calculator in excel would be of great help.

Reply


Calculation of Interest ?

Its a normal way of yearly compound interest . With 8.5% , 100 becomre 108.5 at the end of year .. and then again 8.5% of 108.5 is added back so on

Reply

71 Anurag May 14, 2012 at 11:52 am

Hi Manish,

What is the procedure to be followed for transfer of EPF Account when switching jobs. I just received a statement from my Company regarding my EPF Balance but

isnt there any way so that I can check it myself online like some account number.

Thanks

Reply


Anurag

You can follow these

http://www.rtiindia.org/forum/19466-how-withdraw-pf-without-signing-previous-employer.html

http://www.jagoinvestor.com/forum/epf-account-transfer-issue/2892/

http://www.jagoinvestor.com/forum/transfer-of-epf-account/234/

Reply

73 Vishnu Agarwal May 14, 2012 at 11:53 am



Hi Manish,

Again you surprised us with such a detailed information.

Further, Ive few questions, if you can help:

1. Ive worked in 3 years in one company, and transfer to other, where further worked completing total 6 years. As funds are transferred from Delhi to Bangalore,

PF account number is also changed. Than, what is the life of PF (Table D)?

2. If I want to decrease the PF contribution from 12% to say 2%, is it possible? If it is, Is it dependent on company?

3. How to check the total EPS accumulate as I transferred my PF from previous employee to current, and raising query to epfindia is only giving me EPF & Emp

contribution and telling me if EPS got transferred or not?

Thanks,

Vishnu Agarwal

Reply

74 Paddu May 14, 2012 at 2:46 pm

2. PF contribution has to be 12% of PF basic, period. However the PF basic can be declared to be anything between Rs. 6,500 p.m. and your actual basic, in

case your basic exceeds Rs. 6,500 p.m. Thus minimum PF is 12% of Rs. 6,500 p.m. = Rs. 780 p.m.

Now, my company was allowing this option until it got acquired and now the parent company doesnt give the option of declaring a lower basic to EPF, so

Im sure this is dependent on company.

3. Yeah, EPF account statement is totally silent on EPS. There seems to be no easy way of knowing the EPS balance. Proly need to file an RTI?

Reply


Paddu

Yes .. It actually depends on the company that they want to take 6500 or your actual basic . But most of the companies take the actual numbers .

To get your EPS balance , follow this article : http://www.jagoinvestor.com/2012/02/epf-balance-status-online.html . You might get the SMS and it will

contact two numbers , the lower one is mostly your EPS . Else RTI is the sure shot tool for find all answers

Manish

Reply


1. It would be 9 yrs (6+3) , because it was transfered .

2. No you cant do that. . 12% of basic is mandatory

3. Use RTI http://www.jagoinvestor.com/2012/03/rti-for-epf-withdrawal-or-transfer.html . Works faster , is a little pain to do !

Reply

77 Sundeep Gupta May 14, 2012 at 12:19 pm

Hi Manish,

1. I requested for transfer of my EPF from my previous 2 organisations to my current organisation. This was done in Aug 2011, and I have no updates so far. My

employer say they do not follow up on this. How can I get the information / status of my transfer request.

2. Given that I requested for transfer in aug 2011 and there is no action on that yet, can I opt for withdrawl from my previous EPF account (knowing that its illegal) ?

3. This is a general question. Assuming a person is no longer working and has withdrawn his PF and all his EPF accounts are closed. And after say 1year he plans to

join a job. Can he/she fill form 11 and opt out of the EPF contribution (Given basic is > 6500)

Reply


Sundeep

1. This happens all the time , its just few months as of now and your delay is below average . But you can now file an RTI and find how why is it stuck , do

this : http://www.jagoinvestor.com/2012/03/rti-for-epf-withdrawal-or-transfer.html



2. Yes mostly you can do that, use RTI again in this case .

3. This is tricky , but as per the wordings in the rule of EPF If a person has earliar been part of EPF , then he cant opt out of it , I would say NO

Reply

79 Nita May 14, 2012 at 12:21 pm

Very nice article manish. I was not aware about the pension one can get under EPF

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Yes .. Most of the people dont know because we never see someone sticking to a job for 10 yrs or so !

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81 ravindra May 14, 2012 at 12:21 pm

Thanks, for information gate Rs.3500 maximum limit EPF pension & How to caculate EPF pension

Reply


Welcome !

Reply

83 Koganti Srinivasa Rao May 14, 2012 at 12:46 pm

I am 42 years old. If I want to a get a monthly pension of Rs 15000 per month from my 60th year, how much I have to invest per year and how many years. Please,

let me know which is the best pension plan and insurance company.

Reply


Koganti

In this case EPF will not be useful because one can not get 15000 per month in EPF , its limited to 3-4k only as you can read about . To get 15000 per month

, all you need is 20 lacs and investing in something giving 10% per annum , I think you should focus right now on growing your wealth , so just do SIP in mutualfunds , after 18 yrs , when you are at 60 , there will be plenty of ways of doing it !

Reply

85 SURESAN RAJA May 14, 2012 at 1:01 pm

Mr.Manish, You are great for giving this another good blog.

I need some more clarification of the following:

5. Construction or purchase of house or flat/site or plot for self or spouse or joint ownership

- You should have completed at least five years of service.

- The maximum amount you can avail of is 36 times your wages. To buy a site or plot, the amount is 24 times your salary.

- Can be avail of it just once during the entire service.

If my gross salary is 40000 p.m. then I will be eligible for Rs.144000/- or it is calculating basic pay i.e. suppose Rs.18000/- then I will be eligible for Rs.648000/-.

My service balance is only for 7 years. Is there any terms to link with available EPF/EPS amount to sanction the advance? What will be the interest? I heard that it is

2% p.a.

Please clarify sir,

Reply

86 SURESAN RAJA May 14, 2012 at 1:03 pm



In my earlier comments please read Rs.1440000/- instead of Rs.140000/-

Regards,

Reply


Suresan

The first thing is that you are not getting any LOAN , you are actually getting your own money from EPF , its partial withdrawal here .

Next thing is that it will be 36 X BASIC Salary , because there can be two different people with same basic but different take home . So it does not make

sense to assume take home salary or gross salary . Its basic !

Reply

88 SURESAN RAJA May 15, 2012 at 9:59 am

Thanks sir. But a doubt that if the calculation for 36xBasic goes to Rs.6,48,000/- where as I got the SMS through online PF balance is only

Rs.2,00,000/-. So how much I will get whether it is 6.48 lacs or 80% of the PF balance of Rs. 2 lacs? Regards,

Reply


Better enquire using RTI

Reply

90 Sandip May 14, 2012 at 1:04 pm

Dear Manish, thanks for nice informative article. I want to know one thing thatwhen any EPF loan is due then can anyone repay and take another loan in the same

financial year or not?

Reply


I am not sure what exactly is your question . What is meant by EPF loan ?

Reply


I think he meant for the EPF Loan is the EPF advance we can take for different reasons i.e. for contruction/purchase of flat/house/land, education,

marriage, medical etc. For some of the reason above can take advance only one time eg. we can take 80 to 90% our EPF balance for the

custruction/purchase of flat/house/land only one time in the life. We have to submit the possession certificate within a year. If we use the money to anyother purpose then it will recover in lumsum or from salary with interest @ 2% p.a.

Reply

93 PATEL BHAVESH May 14, 2012 at 1:31 pm

Very nice.Thank u very much for updating as its very helpful in our life as far as fro the serviceman and women.

Reply


Welcome Bhavesh

Reply

95 Bishal May 14, 2012 at 2:19 pm

Hi, does this elf information apply only in India or other countries too? Thanks.



Reply


Its only for India

Reply

97 Bishal May 14, 2012 at 2:20 pm

Sorry, I meant EPF and EPS.

Reply

98 Roshni Nayak May 14, 2012 at 2:26 pm

Hi Manish,

Nice article, you can add 2 more points here,

1. No interest will be credited in the EPF acount which are lying dormant for 3 years or more. This is with effect from April 1,2011.

2. If you withdraw EPF money before five years, it will be taxed.

Regards,

Roshni

Reply


Thanks for those points Rashmi

I considered them to be more known points actually .. But those are points many people would not know about !

Reply

100 Charu Gupta May 14, 2012 at 3:06 pm

Manish,

A very very useful information, especially point 6 and 10. I had been looking for this information from a loong loong time and here you are, heard it and fulfilled it!

Thanks a lot. Btw, though Ill go through you post on how to file for your EPF information, just wanted to know what can I do if my previous employer is not able to

retrieve my EPF account information and details. If my current employer has to contirbute to my EPF, how can they do so when I dont even know my EPF account

number?

Charu!

Reply


Charu

When your new employer does not have your old EPF details , in that case they open a new EPF account on your name and you then have 2 EPF accounts .

You can then choose to transfer your old EPF money to new EPF . You old Employer is not able to locate your EPF account number also ? Just number ! ..

If you have the account number somewhere in old salary slips etc , you can then just fill up a form for transfer of your EPF to new EPF . Do use RTI if this

does not happen fast (6 months)

Manish

Reply

102 Veeraf May 14, 2012 at 3:19 pm

Excellent article contents and presentation. I have not meet a single person in my life time who was able to explain in points EPF, EPS and VPS.

Best Regards,



Reply


Good to hear that Veeraf ! thanks for appreciation . Teach to others now

Reply

104 Satish May 14, 2012 at 4:29 pm

Thanks for posting the great information which many of us does not know. Keep posting similar information regularly

Dr.Satish (Hyderabad)

Reply


Thanks Satish .. I hope you learnt some really new things which you were unaware of !

Reply

106 Praveen May 14, 2012 at 5:16 pm

Hi Manish

Lets say i quit my job and withdraw my EPF.

What are the tax rules for this? Do i need to pay any tax on it?

Reply


Praveen

If you have completed 5 yrs of service , then no tax ,else it will be added as your income and taxed as per your slab !

Reply

108 Sushil May 14, 2012 at 5:27 pm

Manish Ji.Excellent Article once Again.though i knew much about EPF yet point no 3 and 4 are absolutely new for meThis information was indeed very well

I am a regular visitor of your blog and now it has become my habit to visit it atleast once daily to check if anything new is therei am addict to jagoinvestor.compls keep it up

Reply


Good to hear that Sushil .. keep it up

Reply

110 C.R.KESAVAN May 14, 2012 at 6:05 pm

Manish,

The article is a very good one. I did not know about the EPS part(8.33%) does not generate any interest. Employees who get12% of their actual basic(instead of

Rs780) will lose substantial amount of 8.33% of their employers contribution because of inflation & Zero interest. This is really terrifying.

Reply




Yes

Reply

112 Manoj May 14, 2012 at 6:14 pm

Thanks for the info. I have one queryYou have mentioned Employee contribution can go beyond 12% of basic. Is there any cap on this contribution?

Reply


No, there is no cap on this .. 100% of your Basic can go in EPF ..

Reply

114 Pavan May 14, 2012 at 6:31 pm

HI Manish,

Many thanks for your post. My understanding of 4th point (4: You might not get 100% of your EPF money) is below.

Assume monthly salary is 20834. His contribution towards EPS (subject to 541 per month is maximum) is 6492.

He leaves job after 1 year and opts for withdrawal. The EPS he gets is 20834*1.02 (As per table D) = 21250.But this amount is more than the balance he has. Is this correct.

Also, if 10 yrs are crossed, then you are liable for pension Does this mean if he withdraws after 10 years he will get a pension? If Yes how is this calculated.

Reply


Pavan

No . Your EPS is subject to Maximum the amount is there in EPS . So whatever is lower will be given to you . Another thing is that here the salary is basic

salary , not the gross

Also Pension will be given only once you are above age 58 yrs

Reply

116 Pavan May 14, 2012 at 6:57 pm

Hi Manish,

Thanks.. I meant basic salary only since EPFO will only know our basic salary .

One more query..

Do we need to give seperate application to transfer EPS or once we transfer EPF it will happen automatically ?

Reply


It will not happen automatically .. Note that you fill form 19 for EPF withdrawal and form 10 C will be filled for EPS

Manish

Reply

118 Vineet May 14, 2012 at 7:51 pm

Very nice and informative article as usual.

>>>Lifelong pension is available to the member and upon his death members of the family are entitled for the pension.

Till what time family members can get pension? Which family members get it? Only those which are nominee?

Reply



119 Vineet May 14, 2012 at 7:53 pm

Another question what happens if person dies before reaching age 58. Are famliy members able to get pension in such case? If yes, till what time will they

continue to get pension?

Reply


Vineet

Family can only get pension only when the pension was already on .If a person has not started pension, then his nominee will get the EPS money in

lumpsum

Reply


Nominee will be handed over the money ,then it will move to legal heirs !

Reply

122 Suresh Kr. Ray May 14, 2012 at 8:53 pm

Manishji,Once again the article is very relevant and informative. You have made known many hidden aspect of the EPF. One can seldom get these hidden aspect of

EPF anywhere. And Its Happens only In JAGOINVESTOR. THANX

Reply


Thanks Suresh . Keep reading !

Reply

124 Sachin May 14, 2012 at 11:14 pm

Hi Manish very useful information, thanks. I have one Q about VPF..

- You are eligible to withdraw an amount that is up to 36 times your wages.

How is VPF is calculated for withdraw?

Reply


VPF is nothing but EPF only .. just that anything above 12% of your BASIC is labeled as VPF , but withdrawing rule is just same .. everything is EPF once the

money is invested in that

Reply

126 Sudhanshu May 15, 2012 at 12:30 am

Hi Manish,

What is the difference between PPF & EPF ? Can i have both accounts ? Also, please let me know about tax exemption, whether 70000 is for PPF or cumulatively

for both PPF & EPF ?

Reply

127 Manoj May 15, 2012 at 10:26 am

PPF Public Provident Fund, which is not linked with the emplyer and entirely voluntary for a person just like NSC, while EPF Is linked with the employer

as employer has to add 12% amount from his side. You can have both PPF & EPF A/Cs. The limit of Rs. 70000 is increased to Rs. 100000 since lastfinancial year & it is for PPF (not for EPF + PPF). You can have A/Cs for yourself, kid also. But the cumulative amount for you + kid should not exceed Rs.



100000.

Reply

128 Viswa May 15, 2012 at 2:10 am

Very detailed and informative article.

Here is my question:

I have worked in a company in India for 4 years and got transferred USA as an US employee for last 4 years. Since I didnt received any salary in India for the past

4 years, there is no contribution to my EPF account also. So I think my EPF account would be dormant. Can I withdraw the EPF account or any other option isthere.

Thanks.

Reply


Viswa

Yes , you can now withdraw it . Fill up the form 13 for that

Reply

130 Sukesh Choudhary May 15, 2012 at 2:42 am

Hi,

Nice article to go through.

One query regarding pension fund withdrwal, had joined company on 31-Dec-2010, left the organization on 31-Oct-2011, somewhere 10 months service is there,

had applied for EPF and FPF withdrawl after 3 months, got the EPF amount only, had queried the reason behind not getting the pension fund; but still doesnt get any

clarification for the same from the concerned person there.

Can you please update whether i will be eligible for the withdrwal of accumulated pension amount for 10 months service.

Thanks in advance.

Regards,

Sukesh

Reply


Hmm.. if you see the article, as per table D ,the minimum service tenure should be 1 yr, but now its time you file an RTI application for this issue

Reply

132 Sukesh May 15, 2012 at 11:42 pm

In case, me notbeing eligible t withdraw pension fund, whats the use of file of RTI ???

Reply

133 Kannadasan May 15, 2012 at 7:18 am

Hey Manish,

there is a option like get a loan without interest instead of withdrawl a aprtial amount. is it true?.

Reply


No , i have not heard about loan option

Reply




There is no loan but advance against our EPF balance.

Reply

136 Venkatesh May 15, 2012 at 9:18 am

Hi,

The information is very useful. These are very important for each individual. Very specific and to the point. Keep up the good work.

Thanks & regards,Venkatesh R

Reply


Thanks Venkatesh

Reply

138 Suresh K Narula May 15, 2012 at 10:41 am

Excellent Manish, but one fact is always missed while talking about EPF which is interest calculation. Every year, I get PF slip but I could never get right calculation ofinterest i.e. monthly compunded or yearly comounded. Please explore this fact.

Reply

139 Manish Chauhan May 15, 2012 at 10:53 am

Suresh

I am not sure about it, but I think its just normal way .. Compound interest at the end of the year . Will try to find out more

Reply

140 pari May 15, 2012 at 11:02 am

Very informative article!

Reply


Thanks !

Reply

142 Mehul Naik May 15, 2012 at 11:05 am

Very informative post Manish. Thanks!

My parents were both in government service and are now retired. They are getting regular pension. The EPS is in addition to the regular pension govt. employees getor is it included in the same?

Please reply. Thanks.

Reply


Do they have EPF component . I think its in case of private salaried employees

Reply



144 pophale May 15, 2012 at 11:10 am

Dear Manish,

Excellent informative article.I am at the age of 60 and not yet getting pension.What can be done.will I get interest on delayed payment?

Reply


No , you will have to apply for pension . Else you can withdraw it, but you need to take one action

Reply

146 Neerav May 15, 2012 at 2:37 pm

This is regarding point 7. If a person leaves job and for 2 months he has no job then he can withdraw EPF. Now if he joins the new job does he have the option ofnot being part of EPF (although he was a member before)?

Reply


No , he does not have this option . He has been part of it once and now he has to be part of it .

Reply

148 Neerav May 15, 2012 at 2:38 pm

Also regarding the nomination, I think after marriage one has to re-nominate.

Reply

149 pophale May 16, 2012 at 10:36 am

Dear ManishThanks for your reply.I have already applied for pension by submitting documents through my company office.However, pension is not yet started.As usual no

proper answers from govt. dept.Matter is under followup through my company official, being away from my residential place.Any quick remedial action isrecommended by you.

Reply

150 Siddhant May 16, 2012 at 12:48 pm

Hi Manish,

one fact which is important is that The money withdrawn before 5 years in the PF scheme is Taxable in income tax at full rate.This can cause serious issues in personal income tax

Reply

151 Ms Hyacinth May 16, 2012 at 4:16 pm

Hi Manish

Real good insight into EPF keep it UP!!

It would be good if you give some info on FPS also for people who have completed more than 20 years of service in an organisation.

thanks

Reply

152 munish May 16, 2012 at 4:39 pm

hello manish



i was an employee of an insurance co and i have worked for 1 year , nw after around 6 year i want to withdraw my PF but my account is dormant nw

Kindly confirm what is to be done in this case ????

Kindly revert

Munish

Reply

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