There are many practical and helpful provisions out there that are for the welfare of people. Talking about EPFO, or the Employees’ Provident Fund Organization, is a statutory body that is formed under the Employees’ Provident Funds as well as the Miscellaneous Provisions Act, of 1952.
Proper Social Security Net
One of the main advantages of this fund is that it provides you with a social security net for employees. It promises financial stability and even security for employees during their overall retirement years. This is significant, mainly in a nation like India, where the concept of a pension system is not predominant among private-sector employers.
The law gives proper guidelines to the employers to contribute to the EPF Scheme on behalf of the employees. This input is not just a benefit for the employee but also works as a tool for employers to recall and attract talent. It even helps reduce the financial burden on employees for their overall retirement planning.
Overall Retirement Corpus
The EPF Scheme boosts regular savings by both employees and even employers. Employees contribute a part of their salary, along with an equal contribution from the employer that forms a substantial retirement corpus over time. This corpus is there for the employee to avail upon retirement or in certain particular contingencies.
Good Tax Benefits
Under the realm of Section 80C of the Income Tax Act, any sort of contributions that is made towards the EPF Scheme are qualified for tax benefits. Both the employee’s and the employer’s contributions get tax deductible up to a specific limit. Additionally, it is also true that the interest that gets earned on the EPF contributions is without tax.
Interest on Contributions
You know, the contributions of EPF earn a competitive interest rate that is decided annually by the government. This interest is combined on a yearly basis, helping in wealth formation for the employees over the long term. The interest rate is somewhat often higher if you compare it to other conventional savings instruments.
Initial Withdrawal Options
Though the primary objective of the EPF is to ensure retirement savings, it even permits for partial withdrawals for specific purposes such as purchasing a house, education, any sort of medical emergencies, and more. This sort of thing provides financial flexibility to employees during their critical life events.
You can consider EPF accounts to be portable, and it simply means that they are associated with the employee rather than the employer. This ensures steadiness of benefits even if the employee alters jobs. The EPF account can even be transferred seamlessly to the new employer, even dodging disruptions in retirement savings.
Quick Pension Benefits
Other than the EPF, the Employees’ Pension Scheme or EPS, it provides a pension to employees once they get retired. The pension is calculated based on the length of service and normal salary. This additional benefit promises a regular income stream for the retirees.
So, since you know much about employees’ provident fund Organization and what it does, make the most of your EPF.