Tag Archives: Employees’ Provident Fund Organisation of India

New PF (Provident Fund) Norms Announced For Expats/International Workers

There is some bad news in the offing for all Expats/International Workers, who are currently employed in India, by the EPFO(Employees Provident Fund Organization), which handles provident and pension funds for the organized sector employees in India. The existing norms have been tightened a bit. Earlier, contribution to PF (Provident Fund) and EPS (Employees Pension Scheme) was 12% of the monthly pay, this contribution was made mandatory by Indian Government in 2008. Withdrawals from these PF (Provident Fund) were permitted at the end of an expat’s employment in India. But according to these new regulations, now Expats/International Workers would be permitted to withdraw their accumulated balance only after they turn 58. Now, withdrawals are permitted only in case of Permanent Disability and Total Incapacity to work or in case of these suffering from three major diseases, Cancer, Leprosy and Tuberculosis.

However, an exemption has only been made in case of employees from three countries, Belgium, France and Germany, with which India has signed Social Security Agreements. Further details are available at:

http://timesofindia.indiatimes.com/business/india-business/New-PF-norms-leave-expats-in-lurch/articleshow/7439380.cms

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Track Your PF Provident Fund Account Balance Online

As you already know, it is too difficult and involves a lengthy process to enquire about your own PF (Provident Fund) Account. I have already mentioned it at length in one of my earlier blog posts. But, finally some good news for PF account holder. After first announcing it almost 2 years back, EPFO (Employee Provident Fund Organization) has finally said that starting 1st July 2011, PF (Provident Fund) Account related information is just a mouse click away from you, as it will be available online via an SMS to your mobile. PF(Provident Fund) related information will also include the latest transaction regarding your PF account like settlement/transfer-in/transfer-out, your current balance, employer’s contribution etc. However, this facility will be available only for a certain region of the country, at present it is available for Delhi North, Delhi South, Bangalore, Gurgaon, Laxmi Nagar (Delhi), Faridabad and Karnal.  Although, they have announced that very soon this service will be available for remaining PF offices as well.

For knowing the PF account details, please follow the following set of steps.

  • Go to site http://www.epfindia.com/MembBal.html.
  • Select the regional PF office, where your account is maintained.

  • Enter the establishment code (maximum 7 digits), extension field and account number(maximum 7 digits). If there is no extension it can be left blank.
  • Now enter the name and mobile number and submit. Once done, all the relevant information with regards to your PF (Provident Fund) Account will be sent to you by SMS.

Hopefully, this initiative will please the PF Account Holders, who for long have been crying for more transparency and accessibility from government offices, in this case EPFO (Employee Provident Fund Organization)

PF(Provident Fund) Claim Process Track Your PF(Provident Fund) Claim Status

Every time, you plan to purchase an Empty Land or a Constructed House/Apartment and think of your finances, the first dilemma, that you face, is whether it is better to withdraw the money from your Provident Fund(PF) Account or to take a new Plot Loan/Home Loan. I was also in a similar situation, so before taking the final decision, I thought it’s better to go to EPFO (Employee Provident Fund Organization) Regional office, Bangalore in order to get full details, regarding the same.

I went to PF office and was surprised to see that that PF Office Name was written in Hindi. The other thing, that caught my attention was a big sign-board, which had Tomorrow Is Holiday written in bold letters, which is fair enough, given that this was a government office. After all Govt. employees are more interested in holiday than work 😉

I started searching for the Enquiry Counter, but obviously I couldn’t find it myself.  So I entered inside the building and saw few people talking to some officials in a corner. Some of them were carrying their application forms also. I knew, I was in right place. I had a list of questions to ask and gentleman at the counter promptly answered all of them. At times, I found their answers somewhat cryptic and too-brief to understand completely. But whatever information I got from PF Office, I would like to share with you.

PF Claim Eligibility:
You should have completed your service for more than 5 yrs.

Reasons for claiming the PF:
Almost every reason !! You can withdraw the PF(Provident Fund) money for purchasing the plot or flat, constructing the house, family members’ illness, marriage, post matriculation education, property damaged by natural calamity, member’s physically handicapped, financing of member’s life insurance policies.

PF Form:
You have to fill the Application FORM 31 in which you have to mention the purpose,amount and other details to withdraw the money. A Declaration Form also needs to be submitted along with Application Form 31 for purchasing a dwelling site/house/flat or reconstruction of dwelling house or for addition/alteration of the dwelling house.

Track your PF claim: 
You can track the status of PF(Provident Fund) Account Transfer and PF(Provident Fund) Money Withdrawal claims online or on mobile phone. For more details, you can refer to one of my earlier blog “Track Your Provident Fund Claim

Maximum Amount of PF that can be withdrawn:
It varies from reason to reason for which you are applying to withdraw the money. In most of the cases, you can withdraw up to 80-85% of your PF(Provident Fund) Account Balance.

How long does it take to process the PF Claim ??
 When I asked Bangalore EPFO’s Employee, I was told that it will take 2 months to process the claim. This was due to the huge backlog of pending PF forms, which need to be cleared first, before the new claims are processed. But again, it may vary depending on location of Regional EPFO Offices, where your PF Account is managed.

Inquiry about PF Balance:
You need to go to EPFO office where your PF Account is maintained, fill an application to Assistant Commissioner, in order to get details of your PF account.

Conclusion:
Before taking a decision to withdraw your PF money, you should bear in mind that you are earning about  9.5% interest rate on PF money, which is a very good, safe and guaranteed return on your investment, when compared with other investment avenues. As I have mentioned earlier, you can cite almost anything as a reason for withdrawing your PF money.  So you should always think twice before deciding to withdraw. Just think of some critical situations, for example, loosing your job due to market recession or having caught a critical disease, which is not covered by your medical insurance policy.  In such cases, banks will not oblige you with a loan, but your Provident Fund will be your savior.

Track your PF (Provident Fund) Claim Settlement Account Transfer Online Or On Your Mobile Phone

If you have applied for PF(Provident Fund) Account Transfer or Money Withdrawal but have grown fed up of taking rounds of government offices for Tracking the Status of account transfer and money withdrawal claims, stop worrying and cursing the government system. There is a good news for you and all PF Account Holders. Government has finally taken serious notes of the grievances of 4.72 crores subscribers of EPFO (Employee Provident Fund Organisation) and has introduced a facility by which you can track your PF(Provident Fund)  Queries Online and even on your Mobile Phone via SMS.

You will be glad to know that data of 113 PF(Provident Fund) related offices has already been digitized and the same for remaining Seven offices would be completed by March end. Once all hard-copy records are migrated to soft-copy versions, it may not be required to run around PF (Provident Offices) for status-update on your PF (Provident Fund) queries and claims. In stead, EFPO (Employee Provident Fund Organisation) subscribers will receive intimation via Short Mobile Messages (SMS) about the status of their request for Account Transfer and Claim Settlement.

In case of account transfer PF holders will get two messages. First  message will be for closing the existing PF Account followed by other one about the opening of a new PF account and the amount of money transferred from old to new account. Similarly, in Claim Settlement Requests, first SMS  would be for intimating that the EPFO (Employee Provident Fund Organisation) Office has received your application and when the claim is settled, applicant would get  another message stating the amount is credited in the specified bank account.

But all this is possible only when the applicant mentions his or her personal mobile number in the application form. But it is observed that some of the applicants are somewhat hesitant to provide their personal mobile number and hence can’t avail this Mobile Update Facility. In stead, they can make use of this facility online.

At present this process takes about a month to process any claims, because it involves manual processing of your files at multiple desks. When everything is automated and put online, we can expect things to speed up. So let’s keep our fingers crossed and see when we get the news of this upcoming facilities being made available to end-users.

PF Vs PPF Difference Between PF(Provident Fund) and PPF(Public Provident Fund)

Earning the money is one thing, to invest the money on right things is quite another. In fact, Investing money is more important than Earning. So if you have started to earn the money, you should know that what is difference between PF (Provident Fund)/EPF (Employee Provident Fund) and PPF (Public Provident Fund).

What is PF/EPF and PPF:
EPF(Employee Provident Fund)
,as its name suggests, is available to salaried employees and is a retirement benefit scheme. Whereas in PPF ( Public Provident Fund) You need not be a salaried individual.

Amount You Can Deposit :
For PF(Provident Fund), the amount is decided by the government. At present it is 12% of  an employee’s basic salary. However, if he wants to, an employee can contribute more than the stipulated amount. You can open a PPF (Public Provident Fund) account in any nationalized bank or its branches that handle PPF accounts. You can also open it at the head post office or certain selected post offices. The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 70,000.

ROI (Returns On Investment):
Government body decides how much return is on offer for both these funds. For financial year 2010-2011 EPF interest rate has been announced at 9.5% annum, whereas for PPF it has been kept little less at 8 %.

How long is my money blocked?

     

  • PF (Provident Fund): The amount accumulated in the PF is paid at the time of retirement or resignation. Or, it can be transferred from one company to the other if one changes jobs. In case of the death of the employee, the accumulated balance is paid to the legal heir.
  • PPF (Public Provident Fund): The accumulated sum is repayable after 15 years. The entire balance can be withdrawn on maturity, that is, after 15 years of the close of the financial year in which you opened the account. It can be extended for a period of five years after that.

What is the Tax Impact ??
The amount you invest in both PF and PPF is eligible for deduction under the Rs 1,00,000 limit of Section 80C. In PF If you withdraw it before completion of five years, it is taxed whereas in PPF you pay absolutely no tax on maturity.

What if you need the money?
EPF as well as PPF  both have Premature Withdrawal and Loan Facilities available. In EPF, Premature Withdrawal is allowed only for your Daughter’s Wedding (not son or not even yours) or only if you are Buying a Home. For PPF, we can take a loan on the PPF from the third year of opening your account onwards up to the sixth year, whereas we can make complete withdrawals after it completes six years of maturity.

The reason we discussed this at length was to know the answer to a straight forward question : that is which one is better PF or PPF ?? In my opinion, PF is definitely better than PPF because in the case of PF, the employer also contributes to the fund. On the other hand there is no such contribution happening in case of PPF. The rate of interest on PF is also higher (currently 9.50%) than interest on PPF (8%). But the flip-side is, you have a longer lick-in period for your funds. So there are Pros, there are Cons. You choose, what is the best for you, after all its your own hard-earned money, isn’t it 😉