EMPLOYEES PROVIDENT FUND ORGANISATION INTRODUCTION : Employee’s Provident Funds and Miscellaneous Provisions Act, 1952 comprises of following three Scheme : - - Employee’s Provident Fund Scheme 1952 - Employee’s Deposit-Linked Insurance Scheme 1976 - Employee’s Pension Scheme 1995 ( earlier the Family Pension Scheme ) OBJECTIVE : Employee’s Provident Fund Scheme 1952 provides for contributory Provident Fund : Employee’s Pension Scheme 1995 which replaced the erstwhile Employee’s Pension Scheme, 1971 from 16.11.1995 provides for monthly pension and Employee’s Deposit- Linked Insurance Scheme 1976 provides insurance cover to the worker in the unfortunate event of the death of the worker. The primary objective of these three Schemes is to provide social security and to inculcate amongst the worker a spirit of savings while they are gainfully employed and to make provision for benefit after they retire from service and for their family members after their death. To the employers, they provide a steady labour force, which is essential for the productivity and prosperity of the establishment. To the Government, they provide fund of considerable magnitude for utilisation on various projects and programmes designed to promote economic and social development of the country and well being of it people. EMPLOYEE - DEFINATION “Employee” as defined in Section 2(f) of the Act means any person who is employed for wages in any kind of work manual or otherwise, in or in connection with the work of an establishment and who gets wages directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment. MEMBERSHIP All the employee’s ( including casual, part time, daily wage contract etc...) other than an excluded employee are required to be enrolled as members of the fund from the day, the Act comes into force in such establishments. BASIC WAGES “Basic Wages” means all emoluments which are earned by an employee while on duty or or leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash, but does not include. i. the cash value of any food concession. ii. any dearness allowance ( that is to say, all cash payment by whatever name called paid to an employee on account of a rise in the cost of living ), house rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of employment or of work done in such employment. iii. any present made by the employer. EXCLUDED EMPLOYEE “Excluded Employee” as defined under para 2(f) of the Employee’s Provident Fund Scheme means an employee who having been a member of the fund has withdrawn the full amount of accumulations in the fund on retirement from service after attaining the age of 58 years. Or an employee whose pay exceeds Rs. 5000/- p.m. at the time, otherwise entitled to become a member of the fund. EXPLANATION ‘Pay’ includes basic wages with dearness allowance, retaining allowance, ( if any) and cash value of food concessions admissible thereon. EMPLOYEES PROVIDENT FUND SCHEME Employee’s Provident Fund Scheme takes care of following need of the members : i. Retirement ii. Medical Care iii. Housing iv. Family obligations v. Education of Children vi. Financing of Insurance Policy HOW THE EPF SCHEME WORKS As per amendment dated 22.09.1997 in the Act, both the employees and employers contribute to the fund at the rate of 12% of the basic wages, dearness allowance and retaining allowance, if any, payable to employees per month. The rate of contribution is 10% in case of the following establishments : i. Any covered establishment with less than 20 employees. ii. Any sick industrial company as defined in clause ( O ) of Sub-Section 3 of the Sick Industrial Companies ( Special Provisions ) Acts, 1985 and which has been declared as such by the Board for Industrial and Financial Reconstructions. iii. Any establishment which has at the end of any financial year accumulated losses equal to or exceeding its entire networth. iv. Any establishment in the (a) Jute (b) Beedi (c) Brick (d) Coir and (e) Guar gum Industries/ Factories. The contribution under the Employee’s Provident Fund Scheme by the employee and employer will be as under with effect from 22.09.1997. CONTRIBUTION AS PERCENTAGE OF WAGES Name of the Scheme Employee Employer Provident Fund Scheme 12% 3.67% (amount in excess of 8.33%) 10% (in case of 1.67% (amount in certain excess of 8.33%) establishment as per details given above) EPF INTEREST RATE The rate of interest is fixed by the Central Government in consultation with the Central Board of Trustees, Employees Provident Fund every year during March/April. The interest is credited to the members account on monthly running balance with effect from the last day in each year. The rate of interest for the year 1999 – 2000 has been notified as 12%. BENEFITS A. A member of the Provident Fund can withdraw full amount at the credit in the fund on retirement from service after attaining the age of 58 years. Full amount in Provident Fund can also be withdrawn by the member under the following circumstances: i. A member who has not attained the age of 58 year at the time of termination of service. ii. A member is retired on account of permanent and total disablement due to bodily or mental infirmity. iii. On migration from India for permanent settlement abroad or for taking employment abroad. iv. In case of mass or individual retrenchment. B. In case of the following contingencies, the payment of provident fund be made after completing a continuous period of not less than two months immediately preceding the date on which the application for withdrawal is made by the member. i. Where employees of closed establishment are transferred to other establishment, which is not covered under the Act. ii. Where a member is discharged and is given retrenchment compensation under the Industrial Dispute Act, 1947. WITHDRAWAL BEFORE RETIREMENT A member can withdraw upto 90% of the amount of Provident Fund at credit after attaining the age of 57 year or within one year before actual retirement on superannuation whichever is later. Claim application in Form 19 may be submitted to the concerned Provident Fund Office. PARTIAL WITHDRAWAL / ADVANCES A member of Provident Fund is allowed non- refundable advances for the following contingencies : i. For acquiring immovable property. ii. Advances in special cases such as lock out in factory / establishment , where a member has challenged the retrenchment / dismissal by the employer in al Court of Law. iii. For treatment of illness. iv. For marriages or post matriculation education of children. v. Under abnormal conditions such as damage or immovable property by calamity of exceptional nature. vi. Financing of member’s Life Insurance Policy. The partial withdrawals are allowed on completion of minimum of 5 years of membership of the fund and such other certain conditions for house building 7 years of membership in other cases. Claim application in Form 31 may be submitted to the concerned Provident Fund Office. ACCUMULATIONS OF A DECEASED MEMBER A amount of Provident Fund at the credit of the deceased member is payable to nominee / legal heirs. Claim application in Form 20 may be submitted to the concerned Provident Fund Office. TRANSFER OF PROVIDENT FUND ACCOUNT Transfer of Provident Fund account from one region to other, from Exempted Provident Fund Trust to Unexampled Fund in a region and vice-versa can be done as per Scheme. Transfer application in Form 13 may be submitted to the concerned to the Provident Fund Office. NOMINATION The member of Provident Fund shall make a declaration in Form 2, a nomination conferring the right to receive the amount that may stand to the credit in the fund in the event of death. The member may furnish the particulars concerning himself and his family. These particulars furnished by the member of Provident Fund in Form 2 will help the Organisation in building up the data bank for use in the event of death of the member. ANNUAL STATEMENT OF ACCOUNTS As soon as possible and after the close of each period of currency of contribution, annual statement of accounts will be sent to each member through employer of the factory or other establishment where the member was last employed. The statement of accounts in the fund will show the opening balance at the beginning of the period, amount contributed during the year, the total amount of interest credited at the end of the period or any withdrawal during the period and the closing balance at the end of the period. Member should satisfy themselves as to the correctness of the annual statement of accounts and any error should be brought through employer to the notice of the concerned Provident Fund Office within 6 month of the receipt of the statement. EMPLOYEES DEPOSIT – LINKED INSURANCE SCHEME 1976 Employee’s Deposit –Linked Insurance Scheme was notified with effect from 01.08.1976. APPLICABILTY Scheme is applicable to all the members of the Employee’s Provident Fund Scheme 1952. MEMBERSHIP All members of Employee’s Provident Fund Scheme are deemed to be the members of Employee’s Deposit-Linked Insurance Scheme 1976 , unless exemption has been obtained for Employee’s Deposit-Linked Insurance Scheme, in favour of Life Insurance Corporation policy as approved. CONTRIBUTION Employees are not required to contribute under Employee’s Deposit–Linked Insurance Scheme. The employer is required to contribute at the rate of 0.5% of the wages of the members on which the Provident Fund has been paid. BENEFITS Benefits under Employee’s Deposit-Linked Insurance Scheme 1976 are payable to the person who is entitled to receive the provident fund of the deceased member. On the death of the member of the Employee’s Provident Fund, the claimant is paid an amount equal to the average balance in the account of provident fund during preceding 12 months or during the period of membership whichever is less, except where the average balance exceeds Rs.25000/- plus 25% of the amount in excess of Rs.25000/- subject to a maximum of Rs.35000/-. Application for claiming benefits under Employee’s Deposit – Linked Insurance Scheme may be made in Form No. 5 (IF). EMPLOYEE’S PENSION SCHEME, 1995 INTRODUCTION Employee’s Pension Scheme 1995 has been made applicable on 16.11.1995 respectively with effect from 01.04.1993. This new Scheme replaces the erstwhile Family Pension Scheme 1971. MEMBERSHIP i. Every member of the Employee’s Provident Fund Scheme 1952 and opted for Employee’s Family Pension Scheme 1971. ii. All new entrants to the Employee’s Provident Fund Scheme 1952 will become member of the Employee’s Pension Scheme 1995 on compulsory basis. iii. Every employee who has ceased to be a member of the Employee’s Family Pension Scheme 1971 during 01.04.1993 and 15.11.1995 was given option to become of the Employee’s Pension Scheme 1995 upto 31.03.1998. iv. Every existing member of the Employee’s Provident Fund Scheme 1952 not being member of Family Pension Scheme 1971 has option to become member of Employee’s Pension Scheme, 1995. OPTION REQUIREMENT i. Members who have died during 01.04.1993 and 15.11.1995 shall be deemed to have exercised option of joining Employee’s Pension Scheme 1995 with effect from the date of death. ii. Members who are alive may exercise option to become member of the Employee’s Pension Scheme 1995 on the date of exit from the employment by depositing amount alongwith interest at the rate of 8.5% per annum from the date of such withdrawal. iii. Members will have option to join Employee’s Pension Scheme 1995 by depositing the contribution along with uptodate interest under ceased Employee’s Family Pension Scheme 1971 with effect from 01.03.1971. CONTRIBUTION Employee is not required to contribute separately under the Employee’s Pension Scheme 1995. Employer share of Provident Fund Contribution at the rate of 8.33% is diverted to Pension Fund every month. SERVICE FOR PENSION Actual service rendered after 16.11.1995 together with the service for which the contribution has been made under the ceased Family Pension Scheme 1971, if any will be treated as service for pension. A person is entitled for pension after completing the age of 58 years with minimum service of 10 years. Six month or more shall be treated as one year and the service less than six months shall be ignored. DETERMINATION OF PENSIONABLE SALARY Pensionable salary shall be the average monthly pay drawn in any manner including on piece rate basis during the contributory period of service in the span of 12 months preceding the date of exit from membership of the Employee’s Provident Fund. BENEFITS Monthly Member Pension - Superannuation pension/retirement on attaining the age of 58 years. Pension Scheme Certificate - Document indicating Pensionable service and the amount of reduced pension on the date of exit from employment which shall be counted for determination of pension along with fresh service where the member has not attained the age of retirement. Invalidity Pension - In case of permanent and total disablement during the course of employment. Widow Pension - Pension from the date following the date of death of the member whether in service or after exit of employment or after retirement/commencement of monthly member pension. Children Pension - Pension to two children of deceased member up to the age of 25 years in addition to widow. Orphan Pension - Two orphan children up to the age of 25 years entitled for monthly orphan pension equal to 75% of the amount of widow pension. Nominee Pension - In case of unmarried members, a person nominated by the member will get pension equal to widow pension. COMMUTATION OF PENSION Pension shall be allowed for commutation with effect from November 1998. Member can opt for commutation up to a maximum of one third of pension. A member can apply for Pension Claim in Form 10D. WITHDRAWAL BENEFITS A member is allowed withdrawal benefit where a minimum of pensionable service of 10 years has not been rendered on the date of exit / on attaining age of 58 years. Application for claiming benefits under Employee’s Pension Scheme may be made in Form No. 10 C. TIPS FOR MEMBERS : - Do not close the Bank Account mentioned in claim form till the payment from the Provident Fund Office is received. Do not hand over claim form to any unauthorised person. ADDRESS : REGIONAL OFFICE : ACCOUNT OFFICE : BHA VISHYANIDHI BHAWAN VASHI RAILWAY STATION 341, BANDRA ( EAST ) 6 TOWERS, MUMBAI – 400 051. NAVI MUMBAI.
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