Whalesbook
The Employees' Provident Fund (EPF) is a vital savings instrument for full-time employees in India, with mandatory contributions of 12% from both employees and employers based on basic salary.
However, many face significant delays, sometimes stretching to several months or a year, when withdrawing these funds. These delays often stem from common account management issues. Experts advise a periodic review of the EPF account to prevent such problems.
The Employees’ Provident Fund Organisation (EPFO) provides two main portals: the member portal and the passbook portal. Accessing the member portal requires a Universal Account Number (UAN) and password. A critical first step for new users is linking their UAN with their Aadhaar, which is often the initial hurdle if login fails. "If a member can’t log in, it means their UAN isn’t linked with Aadhaar. Get it done through your employer," advises Kunal Kabra, founder and chief executive officer of Kustodian.life.
Once logged in, users must meticulously verify personal details like name, father's name, date of birth, and address. These must precisely match the details on their Aadhaar and PAN cards. Any discrepancy requires immediate correction.
Reviewing employment history is also crucial. The portal lists all past and present employers, and it's vital to confirm the accuracy of joining and exit dates. Even a single day's overlap or missing history needs to be rectified with the employer.
Many members overlook transferring old PF balances when changing jobs or fail to confirm if these transfers have been processed. The passbook portal can help identify this: old employers' passbooks should show a zero balance, with the current employer's passbook displaying active funds. If old accounts still hold money, transfer requests must be initiated on the member portal. It's important to note that only the EPF balance is transferred, not the EPS (Employee Pension Scheme) portion.
Furthermore, verifying eligibility under the Employee Pension Scheme (EPS) is important. Of the employer's 12% contribution, 8.33% goes to EPS (capped monthly at ₹1,250) and 3.67% to EPF. The eligibility rules changed significantly on September 1, 2014. Members who joined before this date are eligible for EPS. Those joining after this date with a basic pay above ₹15,000 are not eligible, meaning the employer's entire 12% contribution goes to EPF. A key principle is: "Once an EPS member, always an EPS member" for those enrolled before September 2014.
Kabra notes that many employers rely on employee self-declarations (Form 11) without fully explaining these rules, leading to incorrect enrolments or missed contributions discovered only during withdrawal rejections. Rectifying these later can be a lengthy process.
Impact:
Ensuring EPF account accuracy and timely updates is essential for financial security, guaranteeing access to savings when needed and securing pension benefits. This proactive management significantly impacts individual financial well-being and contributes to overall economic stability by ensuring people have access to their hard-earned savings.
Rating: 6/10
Difficult Terms:
UAN (Universal Account Number): A unique 12-digit number assigned by the Employees' Provident Fund Organisation (EPFO) to each employee member.
Aadhaar: A 12-digit unique identification number issued by the Unique Identification Authority of India (UIDAI) to all residents.
PAN (Permanent Account Number): A unique alphanumeric number issued by the Income Tax Department for financial transactions.
EPF (Employees' Provident Fund): A retirement savings scheme where employees and employers contribute a portion of the salary.
EPFO (Employees’ Provident Fund Organisation): A statutory body under the Ministry of Labour and Employment, Government of India, that manages the EPF scheme.
EPS (Employee Pension Scheme): A pension scheme managed by EPFO, funded by employer contributions, providing monthly pension after retirement.
Form 11: A declaration form filled by new employees to confirm their eligibility and status regarding EPF and EPS.