22 January

Connect EPF Passbook to “Aadhar”??

Category: Moter insurance

Connect EPF Passbook to “Aadhar”??

The EPFO or the Employees’ Provident Fund Organization is an organization under the direct control of Ministry of Labor & Employment of GoI, constituted to assist the Central Board of Trustees, a statutory body formed by the Employees’ Provident Fund and miscellaneous Provisions Act 1952, headquartered at Bhavishya Nidhi Bhawan, 14, Bhikhai Ji Cama Place, New Delhi.

Armed with the task and duty of administering a compulsory Provident Fund Scheme, a Pension scheme and an insurance scheme for the workforce engaged in the organized sector of India. It also helps enforce Bilateral Social Security Agreements with other countries on a reciprocal basis (currently signed and agreed upon by 17 countries). It is said to manage money amounting to Rs. 8.5 Lakh crore as of March 2016. On October 1st, 2014, the government of India under the current Prime Minister launched Universal Account Number enabling PF portability, after discovering that a staggering sum of about Rs. 27,000 crores lies unclaimed with the authorities.

The idea was first mooted in 1925 for India, with the passage of Provident Act Fund, however it had a very limited scope, following which, in 1929, the Royal Commission on private labor insisted on it, which was agreed upon in 1948, this was further followed by an Ordinance for the same in 1951 and later replaced by the EPF Act 1952, which currently governs the following 3 schemes:

1) Employees’ Provident Fund Scheme, 1952

2) Employees’ deposit Linked Insurance Scheme, 1976

3) Employees’ Pension Scheme, 1995 (replacing the Employees’ Family Pension Scheme, 1971)

The orders of the department can be appealed to Employees’ Provident Fund Appellate Tribunal in New Delhi or in Bengaluru if the employee is located in the states of Karnataka, TN, Kerala, Andhra, Telangana, Goa and Union Territories of Andaman and Nicobar & Puducherry. 

The objective is to enforce the law, its enforcement and availability of its services for covered beneficiaries. However, there are many cases where employees’ have lost hope to get their money back when needed from their EPF accounts, reasons being the paper work, the lax bureaucracy, time intensive nature of the procedure etc. to name a few. Earlier there was an additional problem of non-portability, so if an employee transferred to Kerala wanted to claim his EPF amount from when he worked in Himachal, he had to travel all the way to Himachal to claim it and that too would take several days, so these amounts often went unclaimed as the employees’ didn’t feel it to be worth the hassle. 

How does PF work??

You contribute 12% of your basic salary and your employer would match your contributions up to this limit. Your employer’s contribution would be split into the following two parts:

1) EPF – Provident Fund

2) EPS – pension contribution (8.33%)

Assuming that your contribution is Rs 3,000 (Assuming basic pay of Rs. 25,000. 12% of this would be Rs. 3,000, Your employer’s contribution will also be Rs. 3,000 but would be split as follows:

• EPF – Rs. 1750 &

• EPS – Rs. 1250

It is to be noted that only Rs. 1750 part of employer’s contribution will earn tax, whereas the EPS portion will not earn any tax. However, your full contribution of Rs. 3,000 will earn interests at the rates fixed by RBI which currently stands at 8.55% for the financial year 2017-2018 from the 8.65% in the previous fiscal. 

Universal Account Number:

It is a 12 digit number allotted to employee who is contributing to EPF will be generated for each of the PF member by EPFO. 

Few years back, say your EPFO ID was ABCDEF for company AB, if you leave the company and join another one named CD you would be issued another new ID named CDWXYZ and your money, very often than not would get stuck in ABCDEF but with this universal portability, ABCDEF will remain your EPFO ID irrespective of where and when you work. Along with this, services like online Pass-Book, SMS services on each deposit of contribution and KYC Update can be provided in the comfort of your home. For this, you have to activate UAN from EPFO portal. With UAN, you can check your balance, UAN status, Passbook download, EPF balance, Provident fund claim etc. all online or the respective portals. 

For the year, 2016-17, an incentive program has been launched; all administrative charges will be refunded if all KYC details are updated for all employees. Unable to withdraw PF for one reason or the other, a member can withdraw without the consent of employer. FORM 19 & FORM 10C for Employees’ Provident Fund & Employees’ Pension Scheme respectively can be submitted with one of the following attestations to EPFO office:

1) Any Gazetted Officer

2) The magistrate

3) The Post/Sub Post Master

4) President of the village Union

5) President of the village panchayat where there is no union board

6) Chairman/Secretary/Member of the Municipal/District Local Board

7) MP/MLA

8) Bank Manager of your saving’s account

9) Head Master of educational institution

10) Official authorized by the commissioner

Longevity Risk:

In March 2018, union cabinet claimed almost 84 million EPFO subscribers didn’t have birth dates and father’s name was missing in 110 million, these minor errors have become the excuse to cancel pension and other annuity schemes without any legal backlash or public debate. The underlying cause is believed to be unfunded/underfunded risk through longevity swap transactions.