Having secured a job, an individual aspires for a better life, a comfortable home, health care, and a pension to take them easily through retirement blues. Key to lead the life out of retirement blues is pension planning for which the savings through Employees’ Provident Funds are important.

1. Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952
Having secured a job, an individual aspires for a better life, a comfortable home, health care, and
a pension to take them easily through retirement blues. Key to lead the life out of retirement
blues is pension planning for which the savings through Employees’ Provident Funds are
important.
Deep insights about Employees' Provident Funds are presented in this article including schemes,
eligibility criterion, calculation and withdrawal.
What is the Employee Provident Fund (EPF)?
The Employee Provident Fund is a welfare scheme brought into action for securing the future of
employees. It is a statutory benefit given to the employees at the time of retirement or while
discontinuing the work either permanently or temporarily due to any disability. This fund is
created using the contributions made by employees and employers every month encouraging
them to save a portion of their salary as a form of tax-free investment. Under Section 80C, the
contributions made by the employees are eligible for tax deductions.
These contributions are stored every month in the EPF account which is further linked to the ESIC
(Employees’ State Insurance Scheme). It is a multidimensional social security scheme that
provides cash benefits on certain contingencies to workers, maternity benefits to female workers,
and medical care to self as well as family.
The Central Board of Trustees including the representatives of the employees, employers, and
Government help in performing the management and administration of EPF. This welfare scheme
is administered by a statutory body developed by the government of India under the Ministry of
Labor and Employment, namely, EPFO (Employee Provident Fund Organization). An organization
must register with the EPFO having 20 or more permanent employees working across different
branches and departments.
What is UAN (Universal Account Number)?
UAN is a unique 12-digit number that is generated by the EPFO and assigned to a particular
employee contributing to the EPF. This number remains the same throughout the service period
of an employee allowing them to withdraw and transfer funds without any involvement of the
employer. Universal Account Number is essential for an employee enrolled under EPF which can
be obtained after logging in to the EPFO website. This will then provide different information
including EPF balance on the registered mobile number via SMS.
What are the schemes under the Employee
Provident Fund Act of 1952?

2. Under the EPF Act of 1952, the following three schemes are in operation:
● EPF (Employees’ Provident Fund) Scheme, 1952.
● EDLI (Employees’ Deposit Linked Insurance Scheme) Scheme, 1976.
● EPS (Employees’ Pension Scheme) Scheme, 1995.
They are calculated based on one’s basic salary, Dearness Allowance (DA), and Retaining
Allowance (RA). DA includes the cost of living adjustment paid by the government to the public
sector employees and pensioners. RA is paid by the employer to the employee to retain
resources.
What is the Employees’ Pension Scheme (EPS)?
EPS is designed as a “Benefit Defined Social Insurance Scheme” that came into effect on
November 16, 1995. This scheme was framed under EPF Act, 1952, to provide retiring pension,
superannuation pension, permanent total disablement pension, orphan pension, children pension,
and widow or widower’s pension to whom this Act applies.
What is the Employees Deposit Linked Insurance Scheme (EDLI)?
Employees’ Deposit Linked Insurance Scheme is an insurance cover that is provided for private
sector salaried employees by the EPFO. It was framed to provide certain insurance benefits to the
beneficiaries of the deceased employee which helps in maintaining the economic wealth of the
family.
What is the eligibility criterion to be a member of
EPF?
The eligibility criterion to be followed for becoming a member of EPF include:
● This scheme is applicable pan-India except in the states of Jammu and Kashmir.
● Any individual working either in the public or private sector can apply to become a
member of the EPF scheme.
● It is mandatory for the employees to register for an EPF account with an income of less
than Rs. 15,000 per month.
● Mandatorily, a company or an organization with 20 or more employees should register for
EPF scheme.
● Although the upper and lower limits of employee’s salary are not mandatory; therefore
employees having a salary of more than Rs. 15,000 per month can also voluntarily
register for EPF. Also, companies having less than 20 employees can also register for the
same.
● After becoming an active member of the scheme, an employee is able to avail various
benefits including insurance benefits, pension benefits and Employees Provident Fund
benefits.
How to calculate EPF contribution?

3. Percentile contribution of the employee and the employer
The contribution is divided differently for both the employee and the employer as mentioned
below:
Employee
An employee contributes 12% of their salary to EPF.
Employer
An employer contributes 3.67%, 8.33%, and 0.5% to EPF, EPS, and EDLI respectively. Also, 0.85%
and 0.01% are also contributed for EPF and EDLI Administrative charges respectively.
Through this, it can be analyzed that there is no contribution of an employee to the insurance
premium charges or administrative charges for both EPF and EDLI and solely contributes toward
EPF.
EPF calculation
If the basic salary of an employee is Rs. 13,000 per month, the employee contribution shall be
12% of 13,000, which is equal to Rs. 1,560.
Out of 12%, the employer is required to contribute 8.33% to the Employee Pension Scheme while
the remaining 3.67% must be contributed to the EPF so the 3.67% of Rs. 13,000 is Rs. 477.
How to perform a withdrawal from the EPF
account?
Funds from the EPF account can be withdrawn under certain circumstances which are discussed
in brief as follows:
Withdrawal of full funds from EPF account
● When an employee attains the age of 58 years.
● At the time of employee’s retirement.
● When an employee is unemployed for a period of two months or more.
● Nominees or legal heirs can withdraw the funds in case of the death of an employee still
in service.
Withdrawal of funds while working
Technically, the withdrawal of full EPF amount while an employee is still working is illegal but it
can be done under certain circumstances (followed by specific rules) which are listed as follows:
● To repay a home loan in your name, your spouse’s name or owned by both. This can be
done only when an employee has completed 10 years of service or more whereas 36
times their basic pay is the withdrawable amount.

4. ● For marriage or education of children but with a precondition that the service period
should be of atleast 7 years. Only 50% of the contributed EPF amount is withdrawable by
providing legal proof of the wedding or education.
● To pay for medical treatments (surgery) such as cancer, TB, mental ailments, leprosy and
heart illness for yourself and your family. The maximum withdrawable amount for this is
6 times the basic salary.
● Along with this, funds in the EPF account can be withdrawn in case of constructing or
purchasing a house and to repair the existing home in the name of self, spouse or jointly.
Case Laws
● Manipal Academy of Higher Education v. Provident Fund Commissioner.
● West Bengal v. Vivekananda Vidyamandir & Others.
Conclusion
Employees’ Provident Fund helps employees working in either public or private sector to secure
their future by contributing a small portion of their salary to the EPF account. This account is also
linked to the ESIC, a social security scheme that delivers cash benefits to workers and their
families. EPF is managed and administered by a statutory body, Employee Provident Fund
Organization. There is an eligibility criterion to be followed for becoming a member of EPF
whereas the main point is that it is only applicable pan-India. Moreover, the full withdrawal of
funds can be performed only when an employee is retired. In the case of a deceased employee,
spouse or legal heirs have the authority to withdraw the funds. To sum up, it can be stated that
for a better life and to eliminate retirement blues EPF plays a significant role.