An employee provident fund is a government-mandated contribution for all companies with at least 20 employees. This is a part of the package offered by the government to all employees above Rs. 15,000 per month. It is covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, and is implemented by the Employees’ Provident Fund Organisation (EPFO).
Here are few details on EPF which will help you utilize it more efficiently –
- EPF contribution – Your employer deducts 12% of your salary as a contribution towards the EPF account. They also contribute equally with 12% of combined of basic wages and dearness allowance along with any retaining allowance. If the company has less than 20 employees, then the rate is limited to 10%.
- EPF Calculation – Corporates generally calculate the EPF on the basic salary. Out of the employers’ contrition, 8.33% is moved to Employees’ Pension Scheme which is calculated on Rs. 15,000 itself. Thus, you will only be getting Rs. 1,250 each month as EPS contribution. If your salary is lesser than Rs. 15,000 as well, then you will get 8.33% of that basic amount only as EPS.
- Voluntary Increment – If you as an employee wish to increase your contribution into the EPF account, then it is accounted for in a separate account called as Voluntary Provident Fund (VPF) and earns the same percentage. However, this does not have the same corresponding employers’ contribution.
- Universal Account Number – The EPF provides a Universal Account Number (UAN) an identity for each account holder and you can access your provident fund online using this. Once you retire from your services or attain 55 years of age, you can apply for withdrawing.
- Checking PF balance online- You can download the Umang app to check your EPF account number. Once you download the app, click on “Member” and then go to “Balance/Passbook”. Next, enter your UAN and registered mobile number. If all the details entered are correct, you will be able to view your PF details on the app.
You can look at building a corpus of retirement fund from the EPF amount which you will receive once you leave or change jobs or retire.
How to Invest your EPF
Once you have your tax-free or after-tax PF amount in your hand, you can look at a stable and lucrative investment option to invest and keep earning. With steady and well-credited company FDs like Bajaj Finance FD, you can you can easily look to earn 8.05% for the cumulative 5-year FD. Use the online FD rate calculator on the company website and understand the different interest earnings you can earn from various tenors and deposit amounts.
You can utilize the Systematic Deposit Plan (SDP) feature with Bajaj Finance FD which allows you to invest in an FD with a series of monthly deposits (ranging anywhere between 6 to 48) within the five-year tenor. This is beneficial for new investors and new jobbers. You can invest online and make the monthly deposit payment via automated NACH mandate. The payouts can be chosen as per your needs, with monthly, quarterly, bi-annual and annual interest payout options available.
You can also avail additional benefits such as online easy account opening, online account access, multi-deposit facility – which allows you to open multiple deposits with a single investment. Also, remember to take benefit of additional interest rate benefit with an auto-renewal option.