The various benefits of your Employee Provident Fund

Here are some of these which every subscriber should know-

PF Entitles for Pension Too

There are two elements in EPF- Provident Fund and EPS or Employee Pension Scheme introduced in 1995. The entire contribution of subscriber (12% of basic +DA) goes towards provident fund but from the employer contribution of 12%, 8.33% goes towards EPS (subject to max. Rs 541) and rest added to your provident fund account. The pension on retirement is linked to the number of years in service and the average salary drawn in the year before retirement. This contribution in EPS helps in building a corpus for your pension. Although the maximum pension has been limited to Rs 3500 p.m., it is possible to get a higher pension if employer contributes on basis of employee actual pay and not mandated amount of Rs 6500 p.m. There is also provision in the law where you can receive your EPS money as a lump sum along with your PF. The benefit will be linked to your last year's average salary and number of years in service.  For receiving pension benefits one should be 58 years of age and should have completed 10 years of service without any withdrawal. But there are provisions where if you retire before 58 you will still receive the pension but a reduced amount. Lastly, your family is entitled to the pension if you do not survive the required period, provided they meet some specified conditions.

Insurance Benefit

As per EDLI (Employee Deposit Linked Insurance) scheme, in any organization where group insurance scheme is not available to the employees, the organization has to contribute .5% of monthly basic pay (capped at Maximum Rs 6500) as premium for the life insurance cover. Now, the insurance cover amount is higher of the two: 20 times the average wages of the past 12 months (up to Rs 6,500 per month), i.e. Rs 1,30,000, or the full amount in your PF account up to Rs 50,000 and 40% of the balance amount. For some this may be peanuts but people who work in small enterprises, this amount is good enough to help their family survival.

Special Occasions- EPF at help

There are special occasions in your family or some emergency arises. In case of need of funds and no recourse, EPF comes handy as it gives option to withdraw from the corpus but within a certain limit and by meeting some specified conditions.

1. Goals- Marriage, Education need for self, child or any sibling

In case you have to arrange funds for any of the above need then from your EPF corpus you can withdraw up to 50% of your contribution. Not only this, you can take this benefit three times in your life. However, do remember that for availing this facility you should be in services for at least 7 years. You will have to provide valid documents like marriage card or proof of fee payable to the organization.

2. Your Dream House

You can withdraw from your EPF account for house construction, repair or maintenance or for housing loan repayment. For all of these benefits, there are conditions specified by the organization. If you availed a housing loan and wish to make any repayment, then you can utilize up to 36 months wages from your EPF balance provided you have completed 10 years of service. Similarly, you can also withdraw up to 12 months wages (only once) if you wish to do some alteration or repairing in your existing house. For this you should have completed 5 years of service (10 years for repairing). The number of years of service reduces to five years if wish to purchase/construct a  new plot/house. The maximum you can withdraw is 36 month wages (24 month for plot) but only once. The best part here is that the house can be in name of your spouse or in joint ownership.

3. Medical Emergency

EPF gives benefit for major surgical operations in a hospital or by those suffering from TB, leprosy, paralysis, cancer, mental derangement or heart ailment. You can withdraw up to six times of your salary or the entire contribution made till date, whichever is less. The funds can be utilized for self or family (spouse, children, dependent parents) treatment.

There are other benefits available in EPF like utilizing funds for equipment purchase by physically handicapped, in cases of damage due to natural calamities etc. which one can avail in need. You also have a facility of nominating family members to receive funds after your demise and should be aware that withdrawing EPF after job change is legal only when you are jobless for at least two months. However, with all these benefits do remember that it's a retirement tool and should be utilized only when it is the last option available.