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Reasons Why The Salaried Class Needs a Provident Fund!

The Employee Provident Fund (EPF) is one of the most popular investment schemes among the country’s salaried class. EPF advantages are available to all businesses with 20 or more employees. Unfortunately, the interest rate on it has consistently declined over the last three years, reaching a five-year low of 8.55 percent in 2017-18. However, given the forthcoming general elections, it is likely that the rate would remain stable this year, which is fantastic news for the Employees’ Provident Fund Organisation’s roughly six crore subscribers (EPFO).

Tax advantages

Apart from the fact that an employee’s contribution to an epf balance check number account is tax-deductible under Section 80C, the interest rate earned is also tax-free. Experts say that even if your EPF account has been dormant for more than three years, it continues to collect interest. Also, after five years of continuous service. EPF withdrawals are not taxable unless the employer closes his or her firm or the employee willingly quits his or her position.

Pension for life

While both employers and employees contribute 12% of salaries to the Employees’ Pension Fund, 8.33% of the employer’s contribution is diverted to the Employees’ Pension Scheme (EPS). Under the Employees’ Pension Scheme 1995, 10 years of contributory membership ensures a lifelong pension, according to the retirement fund authority.

Benefits from insurance

Then there are the advantages offered under the EPFO’s Employees Deposit Linked Insurance (EDLI) Scheme, which is a type of insurance. In the event that the individual insured dies during the service period, the registered nominee will receive a lump-sum payment. EPFO increased the minimum assurance amount under this plan to Rs 2.5 lakh from Rs 1.5 lakh previously in February. A maximum assurance benefit of Rs 6 lakh is available.

Option for early withdrawal

While EPFO strongly advises against using PF money as a bank account – after all, social security benefits are only accrued when continuity is maintain – the organisation does allow members to make partial withdrawals after 5-10 years of service for specific needs such as medical treatment. Home loan repayment, and unemployment.

For example, an employee’s portion of the EPF contribution can be withdrawn up to 50% for marriage or education. And up to 36 times the monthly income + dearness allowance can be withdrawn for house construction. EPFO also permits up to 90% of a PF account’s accumulation to be withdrawn to pay off a home loan.

After one month of unemployment, the retirement fund body allowed its users. The option of withdrawing up to 75 percent of their total PF amount. This will be a non-refundable advance, meaning that a member. Will be able to withdraw funds without having to close his account. Under the new provision, members would also be able to withdraw the remaining 25% of their funds. And choose for a final settlement of their accounts after two months of unemployment. Alternatively, they can choose to keep their EPF account, which they can use after they find another job.

Higher profit margins

That’s not all, though. There’s also a chance that your PF account will earn more money in the future. The epfo login uan invests 5 to 15% of its investible deposits in exchange traded funds (ETFs) (ETFs). The ETF investments, on the other hand, do not appear in members’ accounts. And they do not have the choice to increase the percentage of their retirement savings invested in equities. Furthermore, government securities must account for 45-50 percent of the PF fund, debt instruments for 35-45 percent. And money market instruments and infrastructure trusts for 5% each. As a result, the annual return on PF contributions is significantly lower than that of NPS. Which has more aggressive investment possibilities.

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