The Employee Provident Fund Organisation (EPFO) has a significant role in securing a salaried person’s financial future. Opening an EPF account leads the employee as well as the employer to spend a monthly amount to create a corpus to benefit an individual throughout life.
However, most EPF account holders do not know that their PF deduction at a particular time grants them 7 major benefits. So, being an EPF member, this information is something that you need. Let us now look at the merits of monthly PF deductions and how it can help you become financially independent.
EPFO Major benefits
- Pension Benefits After Retirement
The most significant benefit of an EPF account is the Employee Pension Scheme (EPS); a portion of your contribution goes to the pension fund under this scheme. After 58 years of age, an employee can claim a lifetime pension provided that he has been contributing to the pension for 10 years. The minimum amount for a pension is kept at ₹1,000/month, and thus it secures a person’s life financially after retirement. This scheme acts like a net in times of greatest need. - Nomination Facility for Financial Security
EPFO introduced a nomination facility for safeguarding your savings earned through toil and sweat. A nomination adds a family member or someone close to you as a guardian for your EPF balance to be transferred to, in the event of an unfortunate incident befalling you. Simple and secure; brings peace of mind to all subscribers. - Voluntary Provident Fund (VPF) for Higher Savings
Employees can, in addition to the statutory EPF contribution, opt for the Voluntary Provident Fund (VPF). This enables you to contribute even further out of your basic pay, thereby elevating your savings, thus ensuring a firmer financial foothold in times to come. Great for creating a bigger corpus for the long-term financial goals. - EPF Withdrawal Or Transfer Rules
While changing jobs, your EPF funds may be withdrawn or transferred according to rules. But you can only withdraw if you have taken 2 months off from work. Alternatively, transferring your EPF balance to your new employer is possible seamlessly, so your savings remain intact and continue to grow. - Partial Withdrawn For Emergencies
There are certain emergent conditions like marriage, education, medical emergencies, or home construction/renovation under which partial withdrawal is allowed. However, this facility becomes available only after the completion of 7 years of maturity of the account. One time, you can withdraw up to 50% of your balance, a real lifesaver at critical times. - Attractive Interest Rates on EPF Contributions
Your money earns compound interest when it goes into EPF, making it one of the finest savings instruments. At present, the government offers an interest rate of 8.15 percent per annum on EPF deposits. This interest is credited at the end of the year, making savings remarkably larger after several years. - Life Insurance Coverage under EDLI
If your employer has no life insurance cover for you, EPFO provides cover through Employees’ Deposit Linked Insurance (EDLI).