Unlike government employees, the private sector employees are not offered the benefits of pension that serves various financial purposes after their retirement age. EPF scheme is intended to help employees from both non-pension as well as private sectors to save a fraction of their salaries every month. It is used in an event when the employee is temporarily or no longer fit to work or after retirement. About 95% of people understand and assume that they are well aware of the nuances of EPF. However, a quick scan through the list below might reveal that this is not the case!

Nominee allowed under EPF

Most of the people do not know that nomination facility is offered by EPF.

EPF provides a nomination facility to each of its individuals. The nominee made under EPF is contacted during the demise of the EPF holder to handover the amount. It just requires following a simple and basic procedure of filling out a ?FORM 2?. This form is filled to change or update the nominee information. To know more about it, you can contact your finance department or visit your nearest bank or post-office. With no nominee showing up on paper, it can create quite an issue when claiming the amount.

You are eligible to receive pension in EPF

People scarcely know EPF has two categories ? EPS and EPF. The EPF works as provident fund and EPS works as a pensioner. About 12% you give goes to EPF, and out of the 12% that your employer provides, 8.33 % goes to EPS and the remaining portion goes to EPF. A part of this certain percentage that your employer contributes builds your pension under EPF. However; there are certain rules that apply only if:

An individual is legally responsible for the pension and has completed 58 years of age

An individual is legally responsible for the pension if he/she has accomplished 10 years of the service with the same organisation

The maximum amount of pension per month should not be exceeding R3,250 per month

Upon the demise of an individual, the family or nominee is entitled to receive the pension

Volunteer more than statutory limit to EPF

There is no compulsion to invest certain amount in your EPF. You can invest more than 12%; this facility is called VPF (Volunteer provident fund). However; this provision is for your own betterment, which means your employer doesn?t have to match the scale. For them, it is no more contributing than 12%. By investing more percentage of your basic salary will reap you high returns on interest.

No interest on EPF pension

There is no such provision made by EPF to get interest on your pension. However; at the time of withdrawal you are eligible to receive both EPS and EPF. It is recommended to read the fine print to understand this aspect better.

EPF doesn?t offer 100% money withdrawal

If you are under the impression that you will accumulate and obtain a big chunk of money when you withdraw from your EPF, you may be in for a surprise. In EPF, there is a mention of ?TABLE D? which explains how much you will receive upon withdrawal. This table represents slab for each year of your service in context to proportion of wages at exit. Going through this table will let you know the intended amount that you will receive upon withdrawal.

No compulsion to have EPF

Yes, you heard it right, there is no compulsion to join or leave EPF. It is an open option to opt out of EPF, however, there will be no savings gathered at the time of retirement or emergencies unless invested somewhere else. If you do not want to participate in EPF, then from the day of your joining, you need to tell your finance department about the same. There is a small ?FORM 11? filing procedure which acts as a written consent confirming that you are not interested in EPF.

No withdrawing EPF upon job change

There is no withdrawing facility, but only transfers are possible when an individual changes his/her job. An individual is allowed to withdraw the EPF money only when he/she isn?t working at the time of withdrawals. Legally, an individual can only withdraw money after its service period crosses 10 years.

EPF offers life insurance

Another factor that people are not aware of is that EPF provides life insurance. However, the cost of the scheme ? Employee Deposit Linked Insurance (EDLI) ? is borne by your employer. The coverage amount is almost Rs. 6,500; usually employers opt out of this insurance scheme by providing other life insurance benefits to their employees. The sad part about this scheme is the life cover option is not that satisfying. People from small towns or working in small scale industries may prefer to have it.

Pre-mature withdrawals allowed

Pre-mature withdrawal is not allowed if you are still employed. When you are changing jobs you can opt to close out the current EPF and start a new one or transfer the existing EPF to your new place of employment. However; in rare occasions EPF allows withdrawal such as Illness, Higher education, Wedding, Re-paying house loans, and House Construction.

EPF highlights the significance of routine savings over a long time. This small sum contributed during your employment could make a significant difference in your retirement years.