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5/14/2016

What is provident fund (PF)





Provident Fund , abbreviated as PF, is an employee fund where employees contribute a part of their salaries and employers contribute a part as well for their employees. In general, 12 % of your basic salary is contributed by the employee and an equal amount is contributed by employer as well. This is a mandatory retirement saving which is managed by the Government of India. This fund is for the benefits of the citizens of India and acts as pension fund. The fund is paid out to those who retire and in cases to the disabled.

Early PF With drawl is not a very good idea
 PF is an employee fund where you build money slowly but steadily for ensuring the right flow of money during your old age. The rate of interest is 8.75% which is completely tax free if you withdraw the money after 5 years of opening the PF account. In case you are switching your job, you can transfer PF instead of withdrawing the amount.

Procedures to withdraw PF through Employer
 In this process, you can visit the HR of the employer along with a copy of blank cheque. Form 19 and 10C will be handed over to you by the HR. As you submit the forms to HR after filling them up, the form will be attested and send by the the HR to the regional PF office. The PF office will take a time period of one month for processing the application form. The PF amount is then directly transferred to your account by The Employees' Provident Fund Organization (EPFO).

Procedures to withdraw PF without involvement of Employer
 The Employees' Provident Fund Organization (EPFO) has taken various steps so that citizens can withdraw their PF amount without any unwanted delays. In accordance with EPFO, details of Pan Card, Bank Account Number , Aadhaar card is linked to the Universal Account Number (UAN) of your PF account. Once the KYC (Know Your Customer) details are verified by the employer, you can directly withdraw the PF amount using UAN.  The employee does not need to contact the employer any more for withdrawing their PF money. You can provide your UAN, phone number, address as your basic details and a cancelled cheque of bank account to the EPFO. Submit these documents with signature and you will get your PF immediately. The amount will be transferred to your bank account on the basis of KYC details , submitted by employer.
This method is really useful in case if the employee is not being able to contact the previous employer.

In February, rules were set which stated that employees cannot withdraw their PF amount before they turn 58. However , after receiving several letters from different trade unions, new protocols have been set that with drawl of PF money can be done for the purpose of education, housing, medical treatment etc. The new regulations for PF will be effective from August this year.





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