EPFO has introduced a composite form (Form 11) which will help in the process of automatic transfer of provident fund when changing jobs.
EPFO or Employees Provident Fund Organisation has been coming up with many initiatives for EPF (employee provident fund) subscribers. Recently, the retirement fund body introduced a composite form (Form 11) which will help in the process of automatic transfer of provident fund when changing jobs. Typically, both the employer and employee contribute 12 per cent of basic salary towards EPF. An employee’s 12 per cent contribution goes toward EPF kitty, while 8.33 per cent out of the total 12 per cent of the employer’s contribution is invested in EPS or pension scheme. The balance 3.67 per cent is invested in EPF.
In a recent tweet, EPFO highlighted the benefits of retaining the membership of EPFO. “Employers are required to make aware employees the benefits of retaining the PF membership instead of withdrawing accumulations prematurely,” retirement fund body EPFO said.
Here are the long-term benefits of retaining EPFO membership:
1) The employee is able to earn interest on the PF accumulation which is exempt from income tax. Financial planners say that EPF kitty should be meant for long-term savings, not to be withdrawn before one’s retirement. Your EPF account continues to earn interest even if it has been inoperative for more than 3 years, or 36 months. Last year, EPFO had rolled back its earlier decision not to allow payment of interest on dormant accounts. Financial planners say that even if your earlier PF account continues to earn interest, it is better to transfer the accumulation to the present account. Under the current tax rules, withdrawal of accumulated PF balance is taxable if the employee has not rendered continuous service for five years or more to the employer(s).
2) Under the Employees’ Deposit Linked Insurance Scheme, insurance benefit up to Rs. 6 lakh is admissible to survivor of deceased member.
3) 10 years of contributory membership ensures life-long pension under Employees’ Pension Scheme 1995. The retirement body has three social security schemes Employees’ Provident Fund 1952, Employees’ Pension Scheme 1995 and Employees’ Deposit Linked Insurance Scheme 1976 to provide provident fund, pension and group term insurance to its over four crore subscribers. Last year, the Labour Ministry had amended the Employees’ Pension Scheme 1995 to provide the entitlement of minimum monthly pension of Rs. 1,000 to pensioners.
4) The Aadhaar-linked UAN number (verified and authenticated) facilitates the linking of previous accounts of the members in case of change of job. Transferring your employee provident fund (EPF) accounts while changing jobs has become easier. New joinees are no longer required to file separate EPF transfer claims using Form-13 after changing jobs. It will now be done automatically. EPFO has introduced a new composite form called Form 11 that will replace Form 13 in all cases of auto transfer. This was stated by EPFO in an order dated September 20, 2017. (Read: How PF auto transfer works)
5) EPFO subscribers can avail the facility of withdrawals for the purpose of, purchase/construction of house, repayment of house, illness, higher education, marriage etc.
Source by ndtv..