There are various benefits that Employees' Provident Fund Organisation (EPFO) envisages for its members. These Provident Fund benefits include free insurance and pension benefits too. Basically, an employees’ Provident Fund (PF) account is generally considered a retirement-oriented investment option, which is mandatory for each and every employee who fulfills Rs 15000 threshold for monthly PF contribution. An employee gets income tax exemption under Section 80C of the income tax act on one's PF contribution up to Rs 1.5 lakh in single financial year.
Here are 5 key pointers that Employees need to be aware of :-
1. Free insurance
A Provident Fund Account holder by default becomes eligible for free insurance up to Rs 7 lakh in case of death during the service period under EDLI (Employees Deposit Linked Insurance Scheme). Earlier, the death cover for PF account holder was Rs 6 lakh but now it has been enhanced up to Rs 7 lakh. Most importantly, the PF account holder need not to pay any insurance premium for this death cover provided under the EDLI.
2. Pension provision
A PF account holder is eligible for pension after 58 years as well. However, to become eligible for pension, there has to be minimum 15 years regular monthly PF contribution required in one's PF account. The pension benefit comes from the employer's contribution as 8.33% of its contribution (out of 12%) goes to the EPS account of the PF account holder.
3. Loan against PF
In the case of financial emergency, a PF account holder can take loan against one's PF balance and the PF loan interest rate levied is only 1%. The loan will be short term in nature and has to be repaid within 36 months of loan disbursal.
4. Partial withdrawal during emergency
EPFO allows partial withdrawal in case of medical or financial emergency subject to some terms and conditions.
5. Home loan and whole loan repayment
An Individual can use their PF account for home loan
repayment. As per the EPFO rules, they can withdraw up to 90% of the PF balance
for buying a new home or constructing a home. They can also buy land as well
using one's PF balance.
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