EPF Employer

It is like a kind of benevolent benefit provision, causing to provide one sort of money safeguarding for workers when they become retirees. Employees’ Provident Fund started in the year 1952 and regulated under Employees Provident Funds and Miscellaneous Provisions Act, it is legally bound for employers to pay in their part to this employees provident fund account what they deducted from respective wages of a worker.

Gained Knowledge on EPF Contribution

A proportion of the monthly employee salary is saved for future through the contribution made toward the EPF account both by employees and employer’s contribution.

Employee’s Contribution

The EPF employer contribution that the employee provides as per the EPF Act is 12% of the basic salary, that is, dearness allowance. Although the percentage is fixed, its limit gets a cap when an individual’s basic pay is over INR 15,000 per month.

EPF Employer Contribution

In other words, the employer contribution too is deducted at 12% of the basic salary of the employee plus DA. However, whereas employee’s contribution wholly adds the amount to EPF, employer’s contribution is bifurcated into several constituent parts: 

– 3.67% to EPF Account: While 12% of the contribution that employers are compulsorily sought is directly remitted to the employee’s EPF account.

– 8.33% of EPS: The rest contribution from employers that is directly remitted to Employees’ Pension Scheme is 8.33% of basic income of a respective employee, though it’s computed on only INR 15,000. At the time, it was possible to calculate this EPS contribution at its peak to INR 1,250 as that is 8.33% of INR 15,000.

Computation of Employer Contribution

Consider if the basic salary plus DA of an employee is INR 20,000, then his EPF contributions would be:

1. Employee Contribution:

12% of INR 20,000 = INR 2,400.

2. Employer Contribution:

3.67% of INR 20,000 = INR 734.

8.33% of INR 15,000 (capped) amounts to INR 1,250; thus, the total employer’s contribution will be INR 734 (EPF) and INR 1,250 (EPS), a total of INR 1,984.

Effect of EPF Contributions on Employee Savings

Total saving an employee would make in a month using EPF will be as follows:

Employee EPF Contribution: 2,400 Rs.

Employer EPF Contribution: 734 Rs.

Total Monthly EPF Saving: 3,134 Rs

Total Yearly EPF Saving: 3,134 x 12 = 37,608 Rs

That is quite understandable how much the contribution going into a retirement account of an employee through EPF is highly significant and grows with interest compounded along the service period.

How to Transfer EPF Online?

The EPFO has made it easy for transferring EPF accounts with the help of the UAN.

Online Transfer of EPF

Step 1: Activate UAN

Activate your UAN and it must also be connected with the Member IDs of current and previous employment.

Step 2: Login to EPFO Portal

Log in through the main portal of EPFO by using your UAN and password

Step 3: Make Transfer Request

– Log-in to ‘Online Services’ followed by clicking at ‘One Member-One EPF Account (Transfer Request) authenticate personal details and previous employment 

Step 4: Authentication Through Aadhaar

To have this process activated, authenticate one’s Aadhaar number. An individual who aims to transfer EPF money shall seek permission through his current as well as past employer 

Step 5: Submit Form 13

This can be done by uploading the online transfer claim form, which is available on the site.

Important Points to Consider:

UAN should be activated and it should be linked with the mobile number and the details of bank account. Aadhaar and PAN must be updated and verified on the portal of UAN for a smooth transfer process.

Conclusion

The EPF Scheme mandates 12 percent contribution as joint contribution, wherein, however, contribution made by employer is split into EPF and EPS. In other words, 3.67 percent of the employer’s contribution goes to the EPF account and 8.33 percent to the EPS. These contributions augment steady growth of the retirement savings of the worker every month. The annual savings really form a good backup especially with the interest accumulation.

The whole how to transfer EPF online is hassle-free as change in jobs with transfer of savings becomes easy, especially through the UAN portal. It does not allow one to lose even a penny’s worth of savings while changing jobs. End

It is given here just for academic and information purposes. The employees need to consult the financial experts to calculate all the advantages and disadvantages before they decide to invest in the Indian financial market. All the processes of EPF contribution may be modified or updated as per the requirement by EPFO; therefore, keeping in touch with the recent notifications would be better.

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