Employee\nProvident Fund is one of the most popular and promising tools for investment as\nwell as for retirement planning. A\nstatutory body governs employee Provident Fund under Ministry of Labour and\nEmployment, Government of India called as Employee Provident Fund Organization.\nThis regulatory body supervises this tax-free social security scheme to benefit\nretiring employees by providing provident fund, pension, and insurance scheme. <\/p>\n\n\n\n
Here in\nthis article, we will discuss various benefits of the provident fund concerning\nthe employed class:<\/p>\n\n\n\n
Employees’ Provident Funds Ordinance was promulgated on 15th\nNovember 1951 for benefiting employees after retirement. Since its inception,\nthis act has been amended for 15 times.<\/p>\n\n\n\n
All the\norganizations employing 20 or more employees are eligible for this social\nsecurity scheme. Any person engaged in Government,\nPublic or Private sector is qualified to get the benefit of this scheme.\nCurrently, the rate of interest on employee provident fund is 8.55% which is\nfive-years low.<\/p>\n\n\n\n
Employee\nProvident Fund was framed with the intention to provide financial stability and\nsecurity to retiring employees. An Employer is liable to contribute towards\nprovident fund on a regular basis<\/a> once an employee joins the organization. Here\nboth employer and employee contribute @12% of employee’s wages towards Employee\nProvident fund.<\/p>\n\n\n\n Provident\nfund is a tax-free interest amount which secures constant growth of employee’s\nmoney. Longtime investment of provident fund can ensure meeting of employee’s requirements\nincluding his retirement goals.<\/p>\n\n\n\n Provident\nfund amount has various benefits to employed people to secure their future\nafter retirement and even during the tenure of their service. Multiple advantages\nof provident fund amount are as below:<\/p>\n\n\n\n This\namount contributed receives to the employee after retirement in the form of\npension. This pension amount is associated with a number of years of service\nand remuneration withdrawn by the employee at the time of employment. A retiring\nemployee can also receive lump sum EPS amount along with the provident fund\namount, which generally depends on last withdrawn average salary and duration\nof service as well as the department.<\/p>\n\n\n\n Furthermore,\nprovident fund amount if withdrawn after five years of continued service is not\ntaxable, unless the employee gets termination from the service due to some\nreason. <\/p>\n\n\n\n As per the coverage, the registered Nominee will get a\nlump-sum insurance amount in the event of the death of an insured person during\nthe period of his service. Recently, the minimum insurance amount limit has\nbeen increased to Rs. 2.5 lakh from Rs. 1.5 lakh before. The maximum insurance\namount a person can get is Rs.6 lakh.<\/p>\n\n\n\n Similarly,\nemployee can withdraw an amount up to 36 times the monthly salary cum Dearness\nAllowance in case of home renovation or construction. Moreover, employee can\ntake advantage of PF in the event of major surgery or severe disease. In this\ncase, employee can withdraw up to 6 times of his monthly salary or entire\nprovident fund amount.<\/p>\n\n\n\n Moreover,\nup to 50% of the said deposits are invested in government securities, money\nmarket<\/a> instruments, etc. Nevertheless, the government is working on investment\nin other major sectors so that provident fund deposit can earn more interest to\nhelp employees.<\/p>\n\n\n\n Provident fund, a tax-exempted social security scheme, is\none of the most promising investment plans for retiring people. But the government\nneeds to make some new provisions concerning the interest earned on provident\nfund amount which is only 8.55% to secure the future of retiring people. Longtime\ninvestment of provident fund amount ensures meeting of employee’s requirements\nincluding his retirement goals.<\/p>\n\n\n\n For any more information and consultancy visit Enterslice or drop us an email at info@enterslice.com<\/a>.<\/p>\n\n\n\nWhat are various reasons why a provident\nfund is vital to the salaried class?<\/strong><\/h2>\n\n\n\n
Conclusion:<\/strong><\/h2>\n\n\n\n