The Employee Provident Fund (EPF) is a savings scheme established for employees in India to ensure their financial security post-retirement. Managed by the Employees’ Provident Fund Organisation (EPFO), both employees and employers are mandated to contribute a stipulated percentage of an employee’s salary towards the EPF. In this comprehensive guide, we will delve into the withdrawal rules and balance check mechanisms that govern the EPF.
Understanding the Employee Provident Fund (EPF)
The Employee Provident Fund is a robust mechanism for retirement savings in India. Under this scheme, both employees and employers contribute 12% of the employee’s basic salary and Dearness Allowance (DA) to the EPF account. The employee contribution goes entirely into the EPF, whereas the employer’s contribution is divided between the EPF, Employee Pension Scheme (EPS), and Employee Deposit Linked Insurance Scheme (EDLIS).
Withdrawal Rules for EPF
The EPF accounts are typically meant for long-term retirement savings. However, there are certain conditions under which an employee can withdraw funds partially or completely.
Complete Withdrawal
- Retirement: An individual can withdraw the entire EPF balance upon resignation post attaining the age of 58 years.
- Unemployment: If an individual remains unemployed for more than two months, they are eligible to withdraw 75% of the EPF balance after the first month of unemployment and the remaining 25% after the second month.
- Permanent Migration: If an individual migrates abroad for employment, higher education, or permanent settlement, they can withdraw the entire EPF balance.
Partial Withdrawal
- Medical Emergencies: EPF members can withdraw up to six times their monthly salary or the total employee share plus interest, whichever is lesser, for medical emergencies for self, spouse, children, or dependent parents.
- Education and Marriage: For higher education or marriage of self, sibling or children, an EPF holder can withdraw up to 50% of their share (employee’s contribution) plus interest, provided they have completed seven years of service.
- Home Loan Repayment: An individual can withdraw up to 90% of EPF balance to repay a home loan after completing 10 years of service.
- House Construction or Purchase: For the purpose of purchasing or constructing a house, the member can withdraw up to 24 times their monthly wages (including basic wages and dearness allowance).
Procedure for Withdrawal
- Online Submission: Individuals can submit an online withdrawal claim through the EPFO’s Unified Portal using their Universal Account Number (UAN).
- KYC Verification: Ensure that your EPF account is linked with your Aadhaar and bank account, and KYC (Know Your Customer) details are updated.
- Form Submission: Fill out and submit Form 19 for EPF withdrawal or other relevant forms based on the type of withdrawal.
Checking EPF Balance
Unified Portal
- UAN: The Universal Account Number (UAN) is a unique identification number allotted to each EPF member. The UAN remains the same throughout the lifetime of the employee.
- Login: Navigate to the EPFO Unified Portal, login using your UAN and password.
- View Passbook: Once logged in, click on ‘View Passbook’ to see your EPF balance.
Missed Call and SMS Services
An employee can also check PF balance by giving a missed call from their registered mobile number to 011-22901406. Alternatively, EPFO provides an SMS service; send “EPFOHO UAN ENG” (where ENG is the first three letters of your preferred language) to 7738299899 from your registered mobile number to receive your balance details.
Mobile App
- UMANG App: The Government of India provides the UMANG (Unified Mobile Application for New-age Governance) application, which facilitates EPFO services.
- Login: After downloading the app, log in with your UAN and OTP received on your registered mobile number.
- EPF Services: Navigate to EPFO services on the app to check your balance, passbook, and other relevant details.
Interest Calculation
The interest rate for EPF is determined by the government each fiscal year. For the year 2022-2023, the interest rate was set at 8.1%. The interest in your EPF balance is calculated monthly but is deposited at the end of the financial year.
Example Calculation:
- Let’s assume your monthly basic salary is ₹20,000.
- Annual Contribution:
- Employee’s Contribution: 12% of ₹20,000 = ₹2,400 12 = ₹28,800.
- Employer’s Contribution: 12% of ₹20,000 = ₹2,400 (of which 8.33% goes to EPS and the rest to EPF).
Assuming the employer’s total contribution to EPF is ₹1,417/month:
- Annual Interest Calculation:
- Total Yearly Contribution: ₹28,800 (employee) + ₹17,004 (employer) = ₹45,804.
- Interest at 8.1%: ₹45,804 8.1% = ₹3,711.32.
Thus, the yearly EPF balance would be ₹49,515.32.
Conclusion
The Employee Provident Fund (EPF) is a significant tool for ensuring long-term financial security and retirement planning for employees in India. Understanding the withdrawal rules and knowing how to check your EPF balance are crucial for efficient management of your savings.
Disclaimer
This article is for informational purposes only. Investors must conduct their own analysis and consider all pros and cons before engaging in the Indian financial market.
Summary
The Employee Provident Fund (EPF) is a critical savings scheme for employees in India, aiming to secure their financial future post-retirement. Managed by the EPFO, both employees and employers contribute 12% of the employee’s salary towards the EPF. Withdrawal from the EPF can be complete or partial, subject to meeting specific conditions such as retirement, unemployment, medical emergencies, or housing needs. The balance in the EPF can be checked via the EPFO Unified Portal, missed call/SMS services, or the UMANG mobile app.
With a government-determined interest rate (8.1% for FY 2022-2023), interest calculations are based on monthly contributions and deposited annually. The guide also highlights the necessity of having your KYC details updated to facilitate seamless online transactions. While EPF ensures long-term financial stability, investors should evaluate all aspects diligently before making financial decisions.
