Benefits under employees provident fund scheme, Pension Scheme
Benefits under employees provident fund scheme, Benefits of Pension Scheme: The primary purpose of PF fund is to help employees save a fraction of their salary every month so that he can use the same in an event that the employee is temporarily or no longer fit to work or at retirement. Employees Provident Fund Scheme (EPF) is the main scheme under The Employees‘Provident Funds and Miscellaneous Provisions Act, 1952. It is managed under the aegis ofEmployees‘ Provident Fund Organisation (EPFO). read more on epf scheme from below…
Benefits under employees provident fund scheme
- Every employee is required to pay Contribution to the provident fund @ 12%/10% of the Basic Wages, Dearness Allowance and cash value of food concession.
- The Employer will also pay an equal amount of contribution.
- While contributing to Employees’ Provident Funds, the member is eligible for deductions u/s 80C of the Income Tax Act’ 1961
- The Provident Fund accumulations of the member will earn compound interest, calculated on monthly running balances.
- The members are informed of the balance of their Provident Fund accumulation every year through the Annual Statement of Accounts (Form 23). This facility is now converted to online issue of Form 23 on the employer’s portal. With the advent of new regime with allotment of Universal Account Numbers to each and every employee/member of the fund, the department is in the process of sending automated monthly balances over SMS to the registered mobile number of the members.
- The Provident Fund members can avail advances / partial withdrawals for Housing, Marriage, Illness, etc., through application in Form 31 which provides details and documents to be submitted.
- On retirement or on leaving service, the Provident Fund accumulations can be withdrawn in full by submitting application in Form 19.
- In case of premature death, the Provident Fund is payable to Nominee(s)/ family members by submission of Form 20 by each beneficiary.
- A member of Provident Fund also acquires membership under pension scheme.
Benefits of Pension Scheme
- Pension is a boon for the working class. It is no more the prerogative of Government employees only.
- An Employee is eligible for Pension after a minimum of 10 years of pensionable service.
- The Pension is payable on attaining the age of 58 years, whether he is in service or superannuated.
- Early Pension at reduced rate can be availed on leaving the employment, after attaining the age of 50 years.
- Where an employee is totally disabled and leaving service on account of disablement, Disablement Pension is allowed. There is no age and service stipulation to claim the pension in such cases.
- Pension is based on age, wage and service of an employee at the time of his leaving service.
- The payment of Pension is guaranteed and assured even in cases where the employer fails to deposit the pension contributions.
- When a member dies as Bachelor or Spinster or where there is no spouse or children below 25 years, the Family Pension is payable to Nominee till his/her death.
- When there is no valid nomination, the Family Pension is payable to dependent father followed by dependent mother. However, in case of deceased parents, pension will be payable to the legal successor as identified by the claimant and seconded by the Employer through submission of Family Particulars Report.
- In addition to Family Pension to Widow / Widower, Children below 25 years are also eligible for Pension simultaneously. It is payable to the married daughters also, below the age of 25 years.
- On behalf of the minor children the pension is payable to guardian as custodian.
- Any child in a family with total and permanent disablement will receive Children Pension till death.
- The monthly pension is payable through designated Banks and Post Offices on the first day of every month through the Savings Bank account of the pensioner
- The pension can be drawn anywhere in India.
- The employees with less than 10 years of service on the day of superannuation may avail the benefit of withdrawal from Pension Fund.
- Where an employee has not served for 10 years on the date of leaving service and has not attained the age of 58 years, he may obtain a Scheme Certificate so as to continue his membership during un-employment period and the same can be used to count the previous service as and when he joins another establishment covered under the Act.
The Pension quantum is determined separately for the period of service from 1.3.1971 to 15.11.1995 as fixed amount. This is known as “Past Service” benefit.
The Pension for the service rendered on or after 16.11.1995 is calculated through formula namely,
Pensionable Salary x Pensionable Service / 70
An employee on his superannuation is entitled for Pension (through the above formula) upto 60% of the pensionable salary. (Pensionable Salary would mean, the salary drawn by the employee for a period of 12 months prior to the date of superannuation).
Benefits under Employees’ Deposit Linked Insurance Scheme, 1976
- A member of Provident Fund is also a member of Employees Deposit Linked Insurance Scheme.
- In case of death of an employee, while in service, insurance benefit upto Rs.6.00,000/- is payable to the Nominee / family members.
- No contribution is required to be paid by the employee for the insurance benefit. The employer alone is required to pay the contribution.