Table of Contents
- What is EPF?
- What are the Objectives of EPF?
- Employee Provident Fund (EPF) Eligibility
- EPF Contribution Structure Details
- EPF Investment and Management
- EPF Withdrawal Rules
- Who is a Nominee in EPF?
- What is Family as per EPF?
- EPF Nomination Rules and Guidelines
- Prerequisites for Updating EPF Nominee Information
- Procedure to Update EPF Nominee Online
- Procedure to Change EPF Nomination
- What Nominees Receive from EPF Account?
- Updating Profile Photo for EPFO E-Nomination
- How to Activate UAN on EPFO Portal?
- Significance of EPFO E-Nomination
- Benefits of EPFO E-Nomination
- EPFO E-Nomination: Key Facts
- Conclusion
- Faq's
What is EPF?
The Employee Provident Fund (EPF) is a cornerstone of financial stability for employees in India. It's a compulsory retirement savings scheme established by the government to secure the future of workers. Both employers and employees make regular contributions, a percentage of the employee's salary, to build a substantial fund over time.
Managed by the Employees' Provident Fund Organisation (EPFO), the EPF offers numerous benefits beyond retirement planning. One significant advantage is the tax benefits on contributions and interest earned, making it an attractive long-term savings option. The EPF also allows for partial withdrawals under specific circumstances, such as buying a house, funding education, or meeting medical expenses.
Moreover, the EPF isn't just about individual savings; it promotes financial discipline and a culture of saving among employees. The accumulated funds are invested in various financial instruments to generate returns, aiming to grow the corpus over the years. This growth potential, combined with the safety and reliability of government oversight, makes EPF a preferred choice for millions of employees across the country.
What are the Objectives of EPF?
- Retirement Security: The primary goal of EPF is to help employees build a corpus that they can use to sustain themselves financially after retirement.
- Savings Culture: It encourages a culture of long-term savings and financial discipline among employees.
- Tax Benefits: EPF offers tax benefits on both contributions and interest earned, making it an attractive investment avenue.
- Social Security: It serves as a social security net for employees, ensuring they have funds to meet their needs post-retirement.
Employee Provident Fund (EPF) Eligibility
The EPF, or Employees Provident Fund, is a crucial part of Provident Fund Schemes in India. Let's delve into the eligibility criteria for EPF:
- The EPF scheme is available and beneficial for employees across all states in India.
- Salaried employees earning up to ₹15,000 per month are required to register for an EPF account.
- Employees earning more than ₹15,000 can opt for an EPF account with approval from the Assistant PF Commissioner.
- Organizations with a workforce of more than 20 employees are mandated to register for the EPF scheme.
- Organizations with fewer than twenty employees have the option to voluntarily participate in the EPF scheme.
Once enrolled as active members of the EPF program, employees become eligible to receive a range of benefits such as insurance and pension benefits through the employee provident fund scheme.
EPF Contribution Structure Details
The EPF contribution structure involves equal contributions from both the employer and the employee, outlined as follows:
|
Aspect |
Contribution |
|
Employer |
12% |
|
Employee |
12% or 10% |
|
Total |
24% |
Here are some key points regarding EPF's contribution:
- Breakdown of Employer's Contribution: The 12% contributed by the employer is divided into 3.67% towards EPF and 8.33% towards EPS (EPF pension).
- 10% EPF Share: Organizations with 20 or fewer employees, those incurring losses equal to or exceeding net worth, or those declared sick by the Board for Industrial and Financial Reconstruction can contribute at a reduced rate of 10%.
- Allocation of Contributions: The employer's total contribution is further allocated as 8.33% towards the Employees' Pension Scheme and 3.67% towards the Employees' Provident Fund.
- Contribution Visibility: All contributions, including those by the employee and employer, are documented and updated in the EPF member passbook for transparency and record-keeping.
- Employee's Contribution: The entire contribution made by the employee goes towards their provident fund, ensuring a savings corpus for their future.
- Additional Contributions: Apart from regular contributions, employers are also required to pay an additional 0.5% towards the Employees' Deposit Linked Insurance (EDLI). Additionally, administrative costs for EDLI and EPF, totaling 1.1% and 0.01% respectively, are also borne by the employer.
EPF Investment and Management
EPF funds are managed and invested by EPFO in various financial instruments such as government securities, bonds, and equities. The aim is to generate optimal returns while ensuring the safety and stability of the fund.
EPF Withdrawal Rules
While EPF is primarily intended for retirement, partial withdrawals are permitted under certain circumstances:
- Purchase or construction of a house.
- Education-related expenses.
- Medical emergencies for self, family, or dependents.
- Repayment of loans, among others.
Who is a Nominee in EPF?
A nominee in the context of EPFO (Employees' Provident Fund Organisation) plays a crucial role in ensuring the smooth transfer of benefits from an EPF account in the unfortunate event of the account holder's demise. This individual is typically someone close to the account holder, such as a spouse, parent, or child. By nominating a person, EPF account holders designate them to receive the accumulated funds and benefits from the EPF account as per the guidelines set by EPFO.
EPFO guidelines outline specific categories of eligible nominees, emphasizing the importance of selecting the right person to ensure a hassle-free transfer process. EPF account holders need to keep their nominee details up to date to avoid any complications during the settlement process. Regularly reviewing and updating nominee information ensures that the benefits are directed to the intended beneficiary according to the account holder's wishes.
Nominating a family member also provides a sense of financial security and peace of mind, knowing that their loved ones will have access to the EPF savings and associated benefits when needed. Therefore, understanding the nomination process and adhering to EPFO guidelines regarding nominees is crucial for EPF account holders to ensure the protection and efficient utilization of their retirement savings.
What is Family as per EPF?
|
For Male EPF Member |
For Female EPF Member |
|
Wife |
Husband |
|
Children (married or unmarried) |
Children (married or unmarried) |
|
Dependent parents |
Dependent parents |
|
Widow of son and children |
Widow of son and children |
|
- |
Dependent parents of the husband |
This table summarizes the definition of "family" as per the EPF Act for both male and female EPF members, specifying who can be nominated as nominees.
EPF Nomination Rules and Guidelines
EPF nomination rules provide flexibility and clarity for members to designate nominees effectively. Here are key rules to consider:
- Nominee Requirement: Every EPF account must have a nominee to facilitate fund transfer in case of the member's untimely demise.
- Multiple Nominees: Members can nominate more than one person as their nominee(s). They can also specify the proportion of the EPF fund allocated to each nominee.
- Family Nominations: For members of a family, nominees must be family members. Non-family member nominations are invalid in such cases.
- Marriage and Nomination: Any nominations made before marriage become invalid after marriage. It's crucial to update nominations post-marriage to include family members.
- Guardianship for Minors: If a minor is nominated, a family member must act as the guardian until the minor becomes of legal age.
- Nomination Changes: EPF members can easily change or nominate nominees using the online facility whenever necessary.
- Distribution without Nomination: In the absence of a nomination, the EPF funds are distributed equally among family members. However, major sons and married daughters are typically excluded from such distribution.
|
EPF Nomination Rules |
|
1. Every EPF account must have a nominee. |
|
2. Multiple nominees can be designated, with proportions of funds specified if desired. |
|
3. Nominees should be family members for members with a family; non-family nominations are invalid. |
|
4. Nominations made before marriage become invalid post-marriage, requiring updated nominations. |
|
5. A family member must act as the guardian for minor nominees until they reach legal age. |
|
6. Nominees and changes can be managed easily through the online facility provided by EPFO. |
|
7. In the absence of a nomination, EPF funds are distributed equally among family members, excluding major sons and married daughters. |
Understanding and adhering to these EPF nomination rules ensures a smooth and transparent process for nominees to receive benefits as intended by the member. The online nomination system adds convenience and accessibility for members to manage their nominations effectively.
Prerequisites for Updating EPF Nominee Information
Here are the prerequisites that EPFO members must fulfill before updating or changing their EPF nominee:
- Activated and Aadhaar-linked UAN (Universal Account Number): Members must have an activated UAN linked with their Aadhaar number to proceed with nominee updates.
- Mobile Number Linked with Aadhaar: The member's mobile number needs to be linked with their Aadhaar for verification purposes.
- Updated EPF Account Profile: The EPF account profile should have accurate information, including the member's address and a recent photograph.
- Scanned Photo of the Nominee: A scanned copy of the nominee's photograph is required for the update process.
- Aadhaar Number of the Nominee: The Aadhaar number of the nominee needs to be provided for verification and linkage.
- Bank Account Details of the Nominee: The nominee's bank account number along with the IFSC code and address is necessary to ensure smooth fund transfers.
|
Prerequisites for EPF Nominee Update |
|
1. Activated and Aadhaar-linked UAN (Universal Account Number) |
|
2. Mobile number linked with Aadhaar |
|
3. Updated EPF account profile with address and photograph |
|
4. Scanned photo of the nominee |
|
5. Aadhaar number of the nominee |
|
6. Bank account number with IFSC and address of the nominee |
These prerequisites ensure that the EPFO nominee update process is completed accurately and securely, facilitating the seamless management of EPF accounts and nominee details.
Procedure to Update EPF Nominee Online
Visit the UAN Portal:
- Access the UAN portal by visiting https://unifiedportal-mem.epfindia.gov.in/memberinterface/
Login to the Portal:
- Enter your UAN, password, and captcha code to log in to the portal securely.
EPFO Portal
Navigate to E-Nomination:
- Once logged in, go to the 'Manage' tab and select the 'E-Nomination' option from the menu.
Review Existing Nominations:
- If there are existing nominations associated with your account, review them. If there are no nominations, proceed to register a new nominee.
Enter New Nomination:
- Click on the 'Enter new nomination' option to begin adding a new nominee to your EPF account.
E-Nomination
Provide Nominee Details:
- Fill in the required details such as Aadhaar number, name, gender, date of birth, relationship to you, bank account details of the nominee, and upload a recent photograph of the nominee. The system will auto-populate your account details (UAN, member ID, date of birth, etc.), which cannot be edited.
Nominee Details
Proceed with Declaration:
- Read and accept the declaration section, especially the Family Declaration. Select 'Yes' to proceed with adding a new nominee or updating existing nominee details.
Specify Nominee Share:
- Enter the percentage share of the EPF amount that each nominee should receive in case of your demise. Click on 'Save Family Details' to proceed.
Please note that under EPFO regulations, family members eligible for nomination include only the spouse, children, and parents. If a member intends to nominate their siblings, they should indicate 'No' under the 'Having Family' section during the nomination procedure.
Family Declaration
EPF Nomination
e-Sign the Nomination:
- Under the 'Pending Nomination' section, click on 'e-Sign' to electronically sign the nomination form.
Verify Aadhaar Virtual ID:
- Enter your Aadhaar virtual ID and click 'Verify' to authenticate your identity for the nomination process.
Provide Consent and OTP:
- Tick the box to authorize consent for e-KYC services from Aadhaar. Then, request an OTP by clicking 'Get OTP' and enter it for verification. Submit the form after verifying the details and giving consent.
Verify and submit
Nominee Registration Confirmation:
- After successful OTP verification, your new nominee will be registered in your EPF account. You can check the nomination history under the 'e-Nomination' option in the 'Manage' tab to ensure the status shows as 'Nomination Successful.'
Procedure to Change EPF Nomination
To change your EPFO e-nomination, follow these steps:
Access the UAN Portal:
- Log in to the UAN portal using your credentials.
Navigate to E-Nomination Section:
- Under the 'Manage' tab, select the 'E-Nomination' option.
File a Fresh Nomination:
- Click on 'Enter new nomination' to initiate a new nomination process.
Provide Nominee Details:
- Fill in the required details of the new nominee, including Aadhaar number, name, relationship, bank account details, and nominee photograph if necessary.
Specify Nominee Share:
- Enter the percentage share of EPF amount for the new nominee(s).
E-Sign the Fresh Nomination:
- Under the 'Pending Nomination' section, choose 'e-Sign' to electronically sign the new nomination form.
Verify Aadhaar Virtual ID:
- Enter your Aadhaar virtual ID for verification and follow the steps to authenticate your identity.
Authorize Consent and Provide OTP:
- Tick the consent box for e-KYC services and enter the OTP sent to your registered mobile number for verification.
Confirm Nomination Update:
- After successful OTP verification, the new nominee details will replace the previous nomination.
Update as Needed:
- It's important to update the nomination whenever there is a change in your family circumstances, such as a new child birth or the death of a nominated family member. This ensures that your EPF benefits are directed to the right beneficiaries.
Remember, if you initially filed your nomination as an unmarried person and later get married, you must file a fresh nomination as the earlier nomination becomes invalid. Keeping your nominee information updated ensures that your EPF benefits are dispersed according to your current wishes and family situation.
What Nominees Receive from EPF Account?
When you nominate someone on your PF account, they become entitled to certain benefits in case of your unfortunate demise. These benefits encompass several components:
- PF Balance: Your nominated family members will receive the total capital amount that you and your employer have contributed to your PF account over the years. This includes both your contributions and the contributions made by your employer.
- Interest Earnings: Along with the principal amount, your nominees will also receive the accumulated interest on these contributions. The interest is calculated as per the rates set by the Government of India, ensuring that the funds grow over time.
- Employees' Pension Scheme (EPS): A portion of your PF contributions goes towards the Employees' Pension Scheme (EPS). Once you reach 58 years of age, you become eligible to receive a pension income through this scheme. In case of your demise before reaching pension age, your nominees may be eligible for pension benefits depending on the circumstances and rules of the scheme.
- Employees' Deposit Linked Insurance (EDLI): The EDLI is linked to your PF account and provides life insurance cover. If you have nominated your family members, they can claim a sum equal to 35 times your average monthly salary, subject to a cap of INR 7 lakh and a monthly salary limit of INR 15,000.
Ensuring that your family members are added as nominees to your PF account is crucial to safeguard their financial well-being in your absence. With the EPFO mandating e-nomination, it's easier and more secure to add and update nominee details promptly. This step ensures that your loved ones can access these benefits seamlessly when needed, providing them with a measure of financial security during difficult times.
Updating Profile Photo for EPFO E-Nomination
Updating your profile photo is necessary for completing the EPFO e-nomination. Follow these steps to upload or update your profile photo:
Login to your UAN Account:
- Access your UAN account using your credentials.
Navigate to Profile Settings:
- In the Menu section, select 'View,' then choose 'Profile' from the drop-down menu.
Access Change Photo Option:
- Look for the 'Change Photo' option on the left side of the profile section and click on it.
Select and Upload Photo:
- Click on 'Browse' to select a photo from your computer. Ensure that the photo meets the specified requirements:
- Taken using a digital camera.
- Size: 3.5 cm by 4.5 cm.
- File size: Not larger than 100 Kb.
- Format: JPEG/JPG/PNG.
Preview and Upload:
- After selecting the photo, click on the 'Preview' button to view how it will appear. If satisfied, proceed to 'Upload Photograph.'
Confirm Upload:
- Upon uploading, you will be prompted with a confirmation message. Click 'OK' to confirm and upload the previewed photograph.
How to Activate UAN on EPFO Portal?
To activate your UAN and log in to the EPFO member portal, follow these steps:
- Step 1: Visit the UAN portal and locate the 'Activate UAN' option under the 'Important Links' tab on the dashboard.
Activate U
- Step 2: Enter your UAN, Aadhaar number, name, date of birth, mobile number, and captcha code. Then, click on the 'Get Authorisation Pin' button.
Fill in the details
- Step 3: Review the provided details on the screen to ensure accuracy.
- Step 4: Check the 'I Agree' checkbox and enter the four-digit OTP (One-Time Password) sent to your registered mobile number. Click on 'Validate OTP and Activate UAN.'
- Step 5: Once the OTP is successfully verified, your UAN will be activated.
After UAN activation, you will receive a password on your registered mobile number, which you can use to log in to your EPFO member portal account.
Significance of EPFO E-Nomination
EPFO e-nomination is crucial for several reasons:
Facilitates Fund Withdrawal: E-nomination enables nominees or dependents (such as spouse, children, and parents) to withdraw funds from various schemes associated with EPFO. These include the Employees' Provident Fund (EPF), Employees' Pension Scheme (EPS), and Employees' Deposit Linked Insurance Scheme (EDLI).
Claim Settlement Speed: Filing e-nomination speeds up the process of online claim settlement for nominees. Without e-nomination, the settlement process can be delayed as it requires manual intervention and verification.
Nominee Empowerment: By completing e-nomination, you empower your nominees or dependents to access and manage funds seamlessly in your absence. This ensures financial security and a smoother transition of benefits to your loved ones.
Flexible and Convenient: The online e-nomination process via UAN is flexible and convenient, allowing you to update and manage nominee details easily. It eliminates the need for physical paperwork and streamlines the entire nomination process.
No Deadline: EPFO emphasizes that there is no specific deadline for filing e-nomination online. However, initiating this process early is beneficial as it avoids last-minute hassles and ensures that your nomination details are updated and accurate.
Comprehensive Coverage: E-nomination covers a wide range of benefits, including EPF savings, pension benefits under EPS, and insurance coverage through EDLI. This comprehensive coverage ensures that your nominees receive all entitled benefits efficiently.
Peace of Mind: Completing e-nomination offers peace of mind knowing that your financial assets are well-organized and accessible to your nominees as per your preferences and family circumstances.
Benefits of EPFO E-Nomination
|
Benefits of EPFO E-Nomination |
|
Facilitates online claim filing |
|
Enables online payment of PF to nominees |
|
Speeds up claim settlement processes |
|
Simplifies the process into paperless format |
EPFO E-Nomination: Key Facts
Multiple Nominees Allowed:
- Yes, EPFO allows members to add more than one nominee if they wish to nominate multiple family members.
Mandatory Nomination for Spouse and Children:
- Married members with a spouse and children are required to nominate them as beneficiaries.
Nomination for Unmarried Members:
- Unmarried members without specified family members can nominate any person for PF benefits. However, for pension nomination, only one person can be nominated.
Effect of Marriage on Nomination:
- Any previous nomination becomes invalid upon marriage. Newly married members must file a fresh nomination.
Flexibility to Change Nomination:
- PF members can change their EPFO e-nomination anytime. E-signing a new nomination replaces the earlier one.
Updating Nomination with Family Changes:
- Members should update nominations for family changes such as births or deaths to ensure rightful dues for family members.
Online Nomination Process:
- EPF nominations can only be done online through the EPFO's official website. Physical visits to branches for nomination updates are not accepted.
No Physical Submission Required:
- After EPFO e-nomination, there's no need to submit physical documents like Form-2 to PF offices. Everything is managed electronically.
Conclusion
The Employee Provident Fund (EPF) is a critical pillar of financial stability and retirement planning for employees in India. Managed by the Employees' Provident Fund Organisation (EPFO), it offers tax benefits, attractive interest rates, and the flexibility of partial withdrawals for various purposes. EPF contributions are a joint effort between employers and employees, ensuring a substantial corpus over time.
EPF nominations play a vital role in ensuring a seamless transfer of benefits to nominated family members in case of the member's untimely demise. It's essential to understand EPF nomination rules, update nominee information promptly, and activate UAN accounts for efficient management.
The e-nomination process offered by EPFO streamlines these tasks, providing convenience, speed, and paperless transactions. Members can add multiple nominees, change nominations as needed, and empower their loved ones to manage funds effectively.
By completing EPFO e-nomination, members offer financial security and peace of mind to their nominees, ensuring that their hard-earned savings and benefits reach the intended beneficiaries according to their wishes and family circumstances. This digital initiative simplifies the entire nomination process, enhances transparency, and accelerates claim settlements, making it a crucial step in financial planning and security.
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