A part of their monthly salary goes to the Employees Provident Fund (EPF) Scheme for most workers working in the private sector. The employer gives each employee a provident fund (PF) number, but for each employee, there ought to be one single universal account number (UAN). What most workers really need to know is how much goes into the PF account, what is the interest rate on the PF account balance, how to transfer the EPF balance while changing jobs or how to withdraw the PF corpus.
Universal account number (UAN)
The universal account number (UAN) is a specific number allocated to each employee, unlike the PF account number. No matter how many companies he or she serves in, an individual is obliged to continue one single UAN. The 12-digit UAN maintains the same each time an individual switches organisation. The PF number of the employee is linked to the UAN and allows to better manage PF concerns such as PF transfer or withdrawal. One will have to use them for the PF UAN number balance check to get the balance in their provident fund account. In order to figure out the balance, one must log in to his or her PF account using their UAN number.
Provident fund number
One gets a provident fund (PF) number as an employee of any organisation. For an EPFO-managed un-exempted agency, the PF number is an alphanumeric number reflecting the State, Regional Office, Establishment, and Member Code of the PF. In the case of an exempted entity, where the PF is handled by a trust, the number of the PF is only numerical. The PF number is not specific and varies when an employee changes his or her company.
Member of EPFO
The EPFO considers him a “member” as an employee who contributes to his or her EPF account. Any member, i.e. an employee whose monthly salary is below Rs 15,000, is a member of the EPF scheme, as per the EPF regulations, and comes under the EPFO’s jurisdiction. The scheme can also be joined by members with higher salaries.
Contributions towards PF
Employee contribution: Presently, the employee’s obligatory monthly contribution is 12% of the monthly salary, which comprises the monthly basic salary, the dearness allowance and, if any, the retaining allowance. As an employee, the contribution is authorised to be expanded to up to 100% of the min wage. Such a contribution is called a voluntary provident fund (VPF) above the mandatory 12 per cent. The contributions made towards VPF may be adjusted by the employee yearly. An employer needs to meet the employee contribution of 12 per cent of the minimum wage of the employee, but the employer is not obligated to align the higher contribution of the employee towards VPF. The entire amount of the employer’s contribution, nevertheless, does not go into the PF account of the employee. 8.33 per cent (up to Rs 15,000) of the employer’s 12 per cent contribution falls into the employee’s pension scheme (EPS), i.e. per month, Rs 1250, whereas the amount goes towards EPF.
Within six months of the completion of the FY, the employer is obliged to accept the EPF declaration with the employees. Such a declaration includes a break-up of the contribution of the employee and employer, interest received on both balances, contribution towards EPS as well as other related specifics. The EPFO Member Passbook View Facility is open to employees or members enrolled on the Unified Member Portal.
‘Basic Pay’ in this scenario, for the purpose of deciding the cut-off amount of Rs 15,000, covers basic salaries with dearness allowance, retaining allowance (if any) and, if any, the cash benefit of the food allowance. Basically,’ basic pay’ entails, in any case, all emoluments received by an employee while on service or on leave or on holidays with salaries in compliance with the provisions of the employment contract and charged or payable to him in cash. Nevertheless, the below-mentioned cash payments are exempted:
- Cash benefit for food allowance
- Any dearness benefit (i.e. all cash payments, under whatever term, accrued to an employee as a result of a rise in the standard of rent), house rent allowance, overtime allowance, bonus, commission or any other equivalent allowance, payable to the employee in consideration of his or her employment or work undertaken in that workplace.
- Any presents provided by the employer.
The interest rate on the balance of the PF is approved by the central board of trustees of the EPFO and published annually by the government. The interest estimate is based on the monthly cash balance in the PF account of the employee. The interest gained on the contributions of both the employee and the employer is added once a year to the PF account. Interest received is measured in the portfolio on the monthly cash balances. The 2019-20 PF interest rate is 8.5 per cent, while it was announced at 8.65 per cent for 2018-19, up from 8.55 per cent for the 2017-18 FY.