EPF vs EPS

Employee Provident Fund VS Employee Pension Scheme

Both Employee Provident Fund and Employee Pension Schemes are pension offered the government of India to help employees secure their retirement days. The two schemes provide assured returns on your investments and these schemes are particularly designed for salaried employees.

How does an EPF account work?

EPF, being a retirement benefit scheme, ensures that all salaried employees can save a considerable amount of money spend their retirement days. The scheme allows you and your employer to contribute 12% of your basic salary towards your EPF account. Thus, the total contribution to your EPF account per month is 24% of your basic salary. The amount deposited in your EPF account can be withdrawn when you change job or need money to meet your personal needs. The EPF account can be transferred from one organization other.

What is EPS?

It is a pension scheme that offers widow pensions, pension on debasement. Under this scheme, nominees can also receive pensions. Out of the total contribution made by your employer, 8.335 goes toward your EPS account. The amount deposited towards your EPS account is subject to a maximum of Rs. 1250. In order to enjoy the benefit of this scheme, an employee’s basic salary needs to be Rs. 6500 per month.

EPF VS EPS

EPF accounts provide attractive interest on your investments, and it is determined by the central government of India. Currently is 8.75%. But, EPS being a pension scheme does not offer any interest. Interest is not applicable. Hence, no interest is earned on the amount accumulated in EPS.

In case of EPS, you have the option to withdraw your entire savings or get it transferred by obtaining a ‘scheme certificate’, provided there is a break in service period and your service period d is less than 10 years.

The employer does not have to make any contribution towards the EPS account. Only the employer contributes to this account. But, your EPF account receives contribution fro both employer and employee.

EPS provide pension benefits. Under this scheme, lifelong pension is available to the member and upon his death members of the family are entitled for the pension. Employees can receive pension after serving for a minimum period of 10 years and reaching the age 50. But, EPF account does not provide such pension benefits.

Thus, it is clear that when you are salaried individual and invest in an employee provident fund account, automatically your employer enrol you for the Employee Pension Scheme. And, you can enjoy the benefits of EPS without paying any extra amount.

How to transfer your EPF account online or offline

How to transfer your EPF account online or offline

Employees contribute to their EPF accounts during their service. When an employee changes employers and moves to a new establishment, there arises the question of withdrawing or transferring their EPF accounts. EPF account balances can be transferred from an employee’s old establishment to the new one. This includes the interest earned on contributions to the PF account.

EPF transfers can either be done online or offline. Ever since online transfers were introduced, they have gained preference over offline transfers. Online transfers are more convenient and save on time and effort. It is also easier to track online EPF transfer and get status updates.

How to transfer EPF offline

To transfer EPF account balances from past employers to present employers

• an employee will have to fill and submit a duly attested Form 13 to his/her past or present employer. The form can be attested by either the past of present employer.
• As mentioned above under section ‘Form-13’, the form will then have to be submitted to the regional EPF office relevant to the attesting employer. PF contributions from the old account will be transferred to a Trust.
• The old employer will have to submit Annexure K to the relevant Regional Provident Fund Commissioner (RPFC) or Regional EPF office. Annexure K will indicate the employee’s tenure of service and the pension fund account balances. When Annexure K is received and verified, the PF trust will complete the transfer process through NEFT. The balance from the old account will then be credited to the employee’s new account.
• In many cases, though, Annexure K is not submitted which means money cannot be credited by the Trust to the new account. There is no way to track this which led to a large number of transfer cases being stalled. For this reason, claim forms and Annexure K were then digitized to facilitate online EPF transfers.

How to transfer EPF online

To transfer EPF account balances from past employers to present employers online, an employee will have to go through the EPFO portal/website at http://almuqeet.systems/easypf/http://almuqeet.systems/easypf/

• First verify that the past and present employers have registered digital signatures with the EPFO. If they don’t have digital signatures, follow the offline PF transfer procedure.
• On the EPFO portal’s home page, choose the option Online Transfer Claim Portal (OTCP)
• Next choose the option to check eligibility to file a transfer claim online (the other two options are for detailed instructions and FAQs)
• To check eligibility for OCTP, provide prior PF details viz. the old and new EPF account numbers.

• If registered with the site, log-in with the member id; if not register to get log-in details.
• Logging-in entails filling in the document type and number and mobile number (same as the log-in details for the member portals). This will lead to the Online Transfer Claim Application.
• Request for account transfer under the ‘Claim’ option in the menu.
• Part A, Part B and Part C of Form 13 - Request for Transfer of Account Form will be displayed.
  • Part A - fill in personal details viz. name, mobile number, email id, bank account number and IFS code.
  • Part B - fill in details of the old PF account viz. The PF account number and EPF office. Proceed to obtain the following details viz. the employee’s old establishment name and address, the employee’s name, date of birth, joining and exit date, father’s/spouse’s name and the relevant EPF office where the account was held. If the date of birth is not displayed, ensure this detail is updated.
• Part C - similar to Part B, except this pertains to the current PF account details.
• Choose to have the form/claim attested by the current or old employer.
• Preview the form once completed and make changes as required, if any.
• Get the Pin and accept the declaration. Finally enter the pin as sent to the provided mobile number to submit the online claim/form for transfer of PF account.
• Print the filled in form, sign, and submit it to the chosen employer for attestation. The chosen employer verifies the form in the portal. Once verified, the EPFO will proceed to transfer the account.
• Issues can be logged on the portal through the grievance system.

Eligibility for online transfers can be checked on the same portal by providing the old and new pf account details. You can track your EPF transfer claim status online through the portal. Offline transfers are hard to track.

Easy-PF - Employee Provident Fund

The Employees’ Provident Fund (EPF) Scheme, 1952

The Employee Provident Fund Scheme India was enacted in the year 1952, replacing the Employee Provident Fund Ordinance, 1951. The EPF scheme is now known as the Employees’ Provident Fund and Miscellaneous Act, 1952.

The administration of the Act is carried out by the Central Board of Trustees which comprises representatives of three parties viz. the government, employers and employees. The Board is assisted by the Employees’ Provident Fund Organisation (EPFO) which falls under the purview of the Government through the Ministry of Labour and Employment.

The aim of the EPF scheme is to promote retirement savings for employees across India. The Employees’ Provident Fund (EPF) is a corpus of funds built through regular, monthly, contributions made by an employee and his/her employer. The amount contributed to the fund is based on a fixed rate. Employees earn interest on their EPF balances. Both, the interest earned and the total amount withdrawn at maturity are tax-free, making this one of the most popular forms of long-term retirement savings among the working population in India. Besides retirement, funds accumulated in an employee’s EPF account can also be used at time of resignation or death. It also offers financial security in times of emergency and if an employee is rendered unfit for unemployment.

The EPFO, therefore, services an unusually large number of subscribers. This, coupled with the large number of associated transactions involved, ranks the EPFO among the largest organisations, globally. There are currently more than 5 crore members that the EPFO services. Under the Act, the EPFO operates three schemes in all viz.

• Employees’ Provident Fund Scheme, 1952
• Employees’ Pension Scheme, 1995 (which replaced the Employees’ Family Pension Scheme, 1971)
• Employees’ Deposit Linked Insurance Scheme, 1976

Under the Act, member employees are eligible for provident fund, pension and insurance benefits as per the abovementioned schemes.

Benefits of the EPF Scheme 1952

The EPF scheme is one of the most important savings schemes in India for many reasons. Key advantages are highlighted below.

• Tax-free earnings: The interest earned on funds held in an EPF account is tax-free. Withdrawals at maturity / beyond 5 years are also tax-free (except in case of premature withdrawal). This helps optimise growth and returns on savings. Contributions made towards EPF are tax deductible u/s 80C of the Income Tax Act, 1956.
• Financial Security: Funds in the account are not easy to withdraw and so savings is ensured.
  • Retirement - eventually, the amount collected provides financial security at time of retirement.
  • Emergencies - The funds are also useful in times of emergencies to meet certain requirements for which premature withdrawals are allowed in certain cases
  • Loss of income - If an employee for some reason cannot work any longer, these funds help tide over loss of income.
    • Resignation - after 2 months of resignation employees can withdraw accumulated amounts in their PF accounts
    • Death - the accumulated amount is passed on to the employee’s nominee providing them financial stability.
    • Disability - If employees cannot work any longer, EPF balances can be withdrawn to tide one over.
    • Retrenchment or discharge - This where employees are laid off from work. PF savings can bridge the income gap till another job can be found.
• Long-term savings option: This is a sound savings option for employees with long-term investment goals.
• Source of funds: In times of need, EPF funds can provide an employee much needed liquidity. Funds can be borrowed to meet certain pressing needs such as medical, housing, marriage and education.
• Pension: Under the Act, along with provident funds, an employer also contributes towards an employee’s pension fund which the employee can eventually use upon retirement.
• Insurance: Under the Act, an employer also contributes towards an employee’s life insurance in the absence of a group cover, thereby ensuring employees are insured.
• Universal access: Employees can transfer their accounts when they change employers and with the introduction of the Universal Account Number (UAN) they can now access their EPF accounts through a single-point.