10 Fact You May Not Aware About Provident Fund
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 can‟t nominate your brother for EPF.
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.
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 !
Thats because you always get 100% of your EPF part, but for EPS there is separate rule .
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
Withdrawing of your EPF amount after a job switch is totally fine and allowed ? No as per law, it‟s 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.
7: One can opt out of EPF if he wants
Yes! It might be a surprising fact for many , but if one‟s 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).
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 that‟s 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 fulfill:-
A. Marriage or education of self, children or siblings
B. Medical treatment for Self or family (spouse, children, dependent parents)
C. Repay a housing loan for a house in the name of self, spouse or owned jointly
D. Alterations/repairs to an existing home for house in the name of self, spouse or jointly
E. Construction or purchase of house or flat/site or plot for self or spouse or joint ownership
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.