What Are The Benefits Of Employee Provident Fund:
Employee Provident Fund forms an important tool for retirement planning. When the PF account is contributed for a long period, it can provide a person with a considerable amount of cash they can use when they retire. The person can also withdraw part of the contribution based on specific expenses in times of emergencies as defined by the regulations and which include higher education, house construction, illness, and marriage among others. Here are some of the ways in which PF account holders can benefit from the fund.
Employees are entitled to the pension:
In an Employee Provident Fund, there are two elements that people need to know. There is the Provident Fund itself and Employee Pension Scheme that was put in place in 1995. While the PF account holder contributes 12 percent of basic and daily allowances, which goes to the provident fund, on the other hand, part of the 12 percent contributed by the employer, about 8.33 percent goes to the Employee Pension Scheme up to a maximum of Rs. 541 of which the rest is topped on the provident fund account.
To receive the pension benefits, a person should have attained the age of 58 years and has completed 10 years in service without making the withdrawal. Should you retire before you are 58, there are provisions that allow you to get your pension but the amount is reduced. In addition to that, your family may be entitled to the pension in case you die before that period as long as they meet the specifications put in place.
According to Employee Deposit Linked Insurance scheme, in case an organization does not offer group insurance scheme to employees, it is mandated to contribute about 0.5 percent of the basic monthly pay as a premium towards life insurance cover. While for some people, it may seem a small amount, in others, it can help their families survive.
Other special benefits in which EPF can help:
Whenever emergencies arise, it is likely that a family may be compelled to tap into their EPF account, but there are limitations into this. The funds may be used to meet education and marriage. You can take up to 50 percent of your contribution to meet marriage or education expenses. You can also tap this benefit by withdrawing three times in your life. An EPF account holder will need to show prove that they have been in service for not less than 7 years in addition to providing valid documents of fees payable and marriage card.
You may withdraw the EPF account to meet expenses for constructing your dream house, doing repairs and maintenance, as well as paying for a house loan. In case, you have taken a home loan and want to make repayments using this fund, you can take advantage of up to 36 months wages from the balance as long as you have completed 10 years being in service.
In the event that you are undergoing a major surgery operation or you suffer from leprosy, TB, cancer, paralysis, heart ailment, and mental derangement, you may tap into your EPF account to meet the medical bill. You may take up to six times equivalent of your salary or the entire funds you have made to date, depending on which amount is less.Sponsored Links