Provident Fund Rules:
The provident fund is a saving scheme which is availed to Indian citizens and international workers through the provident fund establishment in India. The fund enables fund accumulation as well as interest on the amount which has been accumulated. The collected fund comes from two sources, which are from the employee him or herself and the employer.
A universal number account system was established in October 2014. This enables account portability of the fund from one employer to another in cases of employment change. The twelve digits number UAN is also very helpful in keeping a detailed record of the account and enables centralized origin so as to conduct any or other additional purposes that are related to the fund account.
Rule governing the provident fund
Contributions from both the employers and employees add to the provident fund. However, the entire portion of an employer contribution does not go towards the fund but rather some of it goes towards the pension scheme. The current division of fund has been mentioned below
- 12% of the salary portion of employees goes towards the contribution to the fund
- 12% of the salary of employer is divided into the following portion
- 67% of the contribution goes to the provident fund
- 1% of the contribution goes towards the EPF administration charges
- 5% of the contribution goes towards employees linked deposit insurance
- 01% of the contribution goes to toward the EDLI charges of administration
- 33% of the contribution goes toward the pension scheme
Rules governing employee provident fund have undergone numerous changes over the years and accordingly to the exclusion and inclusion of the employees as per the rules also change. According to the most recent change made on the rules, one should have the following in mind
- The revision made on the minimum salary amount – earlier, having a salary below INR 6500 monthly the person was mandated to contribute toward the fund. The amount was now revised to INR 15000. Therefore, employees with salaries more or equal to that amount are mandated to contribute towards the fund
- Changes made to the pension amount – the minimum pension amount has now been placed at INR 1000 for a widow of a provident fund member. For the orphan and children it has been placed at INR 250 and INR 750 respectively per month. Therefore, the pension henceforth will be calculated as per the salary average for the last 60 months in place of the 12 months.
- Insurance coverage – the initial required coverage under the pension scheme was INR 300,000 per one member
- Change in limit of threshold – the minimum on employees number was reduced to ten of them who are to be employed so that the organization is required to pay some salary percentage to the fund
- Withdrawals – withdrawals from the account can be made via the use of claim forms for various purposes such as insurance policy and buying of building houses
Rules are important because it ensures that people are acting as one force.