EPFO Norms

Subject: Economy

Context:

EPFO relaxes withdrawal norms for EPS-95 subscribers.

Details–various changes approved

It allowed withdrawal of accumulations in Employees’ Pension Scheme 1995 for those subscribers who have only less than six months of service left.
- Earlier, subscribers who have less than six months of service left were allowed to withdraw the accumulations in their employees’ provident fund account only.
A redemption policy for its investments in Exchange traded fund (ETF) units .
The Audited Annual Account, in respect of the EPF Scheme 1952, EPS Scheme 1995 and Employees’ Deposit Linked Insurance (EDLI) Scheme 1976.
11 proposals for surrender/cancellation of exemption from EPF Scheme.
Information Security Policy of the EPFO.

Concept:

Employees’ Provident Funds (EPF) scheme

EPF is a mandatory savings scheme under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
It is managed under the aegis of Employees’ Provident Fund Organisation (EPFO).
It covers every establishment in which 20 or more persons are employed (and certain other establishments which may be notified by the Central Government even if they employ less than 20 persons each).
EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
The employee has to pay a certain contribution towards the provident fund and the same amount is paid by the employer on a monthly basis.
At the end of retirement or during the service (under some circumstances), the employee gets the lump sum amount including the interest on PF contributed which gets accrued
The Central Board of Trustee, which is a key decision making body for EPFO, takes a call on the interest rates that have to be provided on the provident fund deposits, every year.
- EPFO provides a rate of interest only after it is ratified by the government through the finance ministry.

Employees’ Provident Fund Organisation (EPFO)

It is a government organization that manages provident fund and pension accounts of member employees and implements the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
- The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 provides for the institution of provident funds for employees in factories and other establishments.
It is administered by the Ministry of Labour & Employment, Government of India.
The EPFO’s apex decision making-body Central Board of Trustees (CBT), headed by Union Labour Minister

Employees Pension Scheme (EPS-1995):

It is a social security scheme that was launched in 1995.
The scheme, provided by EPFO, makes provisions for pensions for the employees in the organized sector after the retirement at the age of 58 years.
Employees who are members of EPF automatically become members of EPS.
- Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
- Of the employer’s share of 12 %, 8.33 % is diverted towards the EPS.
- Central Govt. also contributes 1.16% of employees’ monthly salary.