Employee Provident Fund (PF) : How to Manage - Transfer or Withraw (EPF/EPS/EDLIS)

Dear Readers,

Let me take the opportunity to take you through the most difficult task in our profession which impacts our personal finances.

It's nothing else except the contribution of our money we make towards PROVIDENT FUND. As it is our hard earned money which we contribute towards PROVIDENT FUND even then we're horrified and confused how can we manage it the best without running behind the government departments and resolve all the issues on our way.

In fact, now-a-days, managing PROVIDENT FUND has become very easy and hassle free task. We're afraid of it because either we do not have much understanding of the fact behind it or about its functionality.

First of all we need to understand what is PROVIDENT FUND?

"A provident fund is created with a purpose of providing financial security and stability to elderly people. Generally one contributes in these funds when one starts as employee, the contributions are made on a regular basis (monthly in most cases).  It’s purpose is to help employees save a fraction of their salary every month, to be used in an event that the employee is temporarily or no longer fit to work or at retirement. The investments made by a number of people / employees are pooled together and invested by a trust."

In this article, we'll be concentrating on how much amount should be deducted from our salary and how that should be allocated under different heads (EPF, EPS and EDLIS). How can we easily transfer PF or withdraw it.

Further, PROVIDENT FUND is dividend into three parts:

1. Employee Provident Fund (EPF)

2. Employee Pension Scheme (EPS)

3. Emploees Deposit Linked Insurance Scheme (EDLIS)

Contribution towards PROVIDENT FUND:

1. To move ahead, first we've to find the whether contributing towards is mandatory or voluntary?

Because half of our problem will be solved out at first stage itself.

Contribution towards PF was mandatory prior to amendments brought in Sep'2014. After the amendments in Sep'2014 in PF act, it is not mandatory to contribute in PROVIDENT FUND, but that also has some guidelines which we've to follow.

If your basic salary is more than Rs 15000, in that case it is voluntary to contribute towards PF. But if you basic salary is Rs 15000 or less than that, in that case contribution towards PF is mandatory.

Monthly Salary	Before/After	Provident Fund	Pension Scheme	Insurance Scheme
Upto 6500	Before 1 Sep 2014	Mandatory	Mandatory	Mandatory
	After 1 Sep 2014	Mandatory	Mandatory	Mandatory
Between 6500 to 15000	Before 1 Sep 2014	Voluntary	Mandatory if covered under PF	Mandatory if covered under PF
	After 1 Sep 2014	Mandatory	Mandatory	Mandatory
More than Rs 15,000	Before 1 Sep 2014	Voluntary	Mandatory if covered under PF	Mandatory if covered under PF
	After 1 Sep 2014	Voluntary	Cannot become a member	Mandatory if covered under PF

2. What contribution, one has to make towards PROVIDENT FUND?

This is something where confusion starts in people life. We all know that contribution is 12.5% of our basic salary.

In fact, contribution towards PROVIDENT FUND has been divided as below:

Employee Contribution - 12% of basic salary

Employer Contribution - 12% of basic salary

Employee contribution is 100% credited into provident fund but Employer contribution is not 100% credited into PROVIDENT FUND.

Table below gives the rates of contribution of EPF, EPS, EDLI, Admin charges in India.

Scheme Name	Employee contribution	Employer contribution
Employee provident fund	12%	3.67%
Employees’ Pension scheme	0	8.33%
Employees Deposit linked insurance	0	0.5%
EPF Administrative  charges	0	1.1%
EDLIS Administrative charges	0	0.01%

Employees drawing basic salary upto Rs 15000(From Sep 1 2014 salary limit has been increased to Rs 15,000  before it was Rs 6500) have to compulsory contribute to the Provident fund and employees drawing above Rs 6501/- have an option to become member of the Provident Fund. It is beneficial for employees who draw salary above Rs 15001(Before Sep 1 2014 minimum was Rs 6501) to become member of Provident Fund as it is deducted from the salary before it is deposited on bank or given hence compulsorily saving happens. Employee’s contribution is matched by Employer’s contribution(till 12%) so extra money and it is helpful for tax purpose too. The employer contribution is exempt from tax and employee’s contribution is taxable but eligible for deduction under section 80C of Income tax Act.

Those who started job after 1 Sep 2014 and earning more than 15,000  Rs in basic and DA will not be contributing to the EPS or Pension scheme.

Calculation of Employees Provident Fund Contributions

Basic salary of Rs 3500

Let us calculate the contribution of an employee who is getting a basic salary of Rs 3500.

Contribution Towards	Calculation	Amount
EPF Employees share	3500 x 12%	420
EPS Employer share	3500 x 8.33%	292
EPF employer share	3500 x 3.67%	128
EDLI charges	3500 x 0.5%	18
EPF Admin charges	3500 x 1.1%	39
EDLI Admin charges	3500 x 0.01%	0.35 ( round up to Rs 1/-)

Basic salary above Rs 15,000 (Before Sep 1 2014 limit was Rs 6500)

In such cases companies uses different method for calculation as per their  pay roll policy. Consider an employee getting a basic salary of 20000. We can calculate it in different ways but EPS is calculated only up to 15000( was Rs 6500 before 1 Sep 2014) that means the maximum amount is fixed to Rs 1250( Before Sep 1 2014 it was 541.00). The three methods mentioned below are based on the above example.

Method-1

If company consider total basic salary above the limit fixed 15,000(6500.00 before 1 Sep 2014) for PF calculation. Employer has decided to contribute on total basic salary which is 12 % on 20,000.00 equal to 2400.00. EPS Share is fixed to 1250. Balance (2400-1250) goes to EPF account  1150.00. You may be thinking that, what about 3.67%?,

Contribution Towards	Calculation	Amount
EPF Employees share	20000 x 12%	2400
EPS Employer share	15000 x 8.33%	1250
EPF employer share	20000 x 12% (-) 1250	1150
EDLI charges	20000 x 0.5%	220
EPF Admin charges	20000 x 1.1%	220
EDLI Admin charges	20000 x 0.01%	2

Method -2

Some companies follows the below method in which employee share is calculated on 20000 and employer share is calculated on up limit Rs 15000

Contribution Towards	Calculation	Amount
EPF Employees share	20000 x 12%	2400
EPS Employer share	15000 x 8.33%	1250
EPF employer share	15000 x 3.67%	550.50
EDLI charges	15000 x 0.5%	75
EPF Admin charges	15000 x 1.1%	165
EDLI Admin charges	15000 x 0.01%	1.5

Method-3

Some companies calculate both employer and employee shares on 15000 (Rs 6500 before  Sep 2014)  in spite of higher basic salary than 15000(Rs 6500 before  Sep 2014)

Contribution Towards	Calculation	Amount
EPF Employees share	15000 x 12%	1880
EPS Employer share	15000 x 8.33%	1249.5(rounded to 1250)
EPF employer share	15000 x 3.67%	555.5 (rounded to 555)
EDLI charges	15000 x 0.5%	75
EPF Admin charges	15000 x 1.1%	165
EDLI Admin charges	15000 x 0.01%	1.5

Ref - bemoneyaware.com

3. What is interest rate on pf funds?

It is announced by government from time to time. one should refer to EFPO website under resources for employees for updated details on this.

4. Do we get interest on total contribution towards EPF & EPS?

No, we get interest only on EPF contribution not on EPS.

5. How to check EPF balance?

We can check balance in our account through our mobile as well as internet.

Recently, EPFO has released mobile application which is very easy to use and provide us complete information about KYC of the account, passbook of account and latest contribution made towards account.

Using this application, we can activate UAN and get all required information on our finger tips.

Also, we can visit EPFO website to check balance in the account.

1) Go to http://www.epfindia.com/site_en/KYEPFB.php

2) Select EPFO Office where PF account it maintained. Suppose the account is in Haryana. Select Haryana from the Drop Down.

3) Select the office name: Once you select state in earlier state, it would then show code for various EPFO offices in Haryana. Say your EPFO office was in Gurgaaon. So select the office name Gurgaon, the establishment code would be GN-GGN. This would take you to next screen which has GN GGN filled for establishment code.

4) Enter PF Account Number which is in the format :

EPFO Office Code/Establishment Code(Max. 7 Digits)/Extension(Max. 3 digits)/Account Number (Max 7 digit)

PF Account Number may not have Extension code, in that case leave it blank.

6. How to withdraw PF?

Can one withdraw his money accumulated in pf or not?

Definitely, one can withdraw pf accumulated money but there are specific condition under which pf money can be withdraw:

a. Purchase of property
b. Children education
c. Children marriage
d. Payment of Insurance
e. Left the job or don;t join any other job.

withdraw of pf under the above mentioned reasons are legal except these pf withdraw is illegal. But our government departments does not have anything in place which may be used to avoid any illegal withdraw of pf funds.

EPF (PF) and EPS both can be withdrawn together or separately.

For PF we need to fill and submit FORM 19 and for EPS FORM 10C as per instruction provided by PF department on their website.

Also, as per latest update, Indian government is  introducing advanced technology and going to make the withdraw process online. That will make it more viable, easy and transparent.

This is supposed to be implemented by Dec 2015.


7. How to transfer provident fund?

PF Can be transferred online as well as offline.

For transferring it online member need to submit claim through Online Transfer Claim Portal (OTCP)

Member can also track the status of transfer claim online using employee section on EPFO website.

If you claim has not been settled, member can also file grievance online using EPFiGMS (which grievance management tool)

If a member don't want to go online, they may use FORM 13 as below:

Provident fund can be transferred from one account  to another account. For this, we have to use FORM - 13 and fill it as per instructions provided by PF office on their website, get it approved by any of your employer and submit.

But while transferring PROVIDENT FUND we have to make sure that we take care of EPS (Pension Fund). Because FORM-13 is for PF only not for EPS.

Pension Fund cannot be transferred. For Pension, member can apply to take SCHEME CERTIFICATE or WITHDRAW it.

So when member apply for the transfer of PROVIDENT FUND, please fill FORM 19C to take SCHEME CERTIFICATE or WITHDRAW PENSION FUND.

FORM 19C CAN BE APPROVED BY PREVIOUS EMPLOYER ONLY.

As per latest update, if employee both account are linked with UAN (Unique Account Number) in that case, PF will be transferred same day.

8. How to link your PF account with UAN?

Employee need to fill FORM 11 and submit it to the employer. It is employer responsibility to get the form submit and link the account.

If an employee has already activated his UAN he/she can fill it online after logging into UAN member portal.


Further update will be provided in another post.

Thanks for your and time.