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Employees Provident Fund Organisation (EPFO)

Focus: GS III- Indian Economy

Why in News?

EPFO now offers an annual interest rate of 8.5 percent.

About Employees’ Provident Fund Organisation (EPFO)

Nodal: Ministry of Labour & Employment

  • It is a government organization that manages provident fund and pension accounts of member employees and implements the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
  • The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 provides for the institution of provident funds for employees in factories and other establishments.
  • It is one of the World’s largest Social Security Organisations in terms of clientele and the volume of financial transactions undertaken.

Employees Pension Scheme (EPS):

  • It is a social security scheme that was launched in 1995. It offers pension on disablement, widow pension, and pension for nominees.
  • The scheme, provided by EPFO, makes provisions for pensions for the employees in the organized sector after the retirement at the age of 58 years.

Main features:

  • Employees who are members of EPF automatically become members of EPS.
  • Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
  • EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
  • Of the employer’s share of 12 %, 8.33 % is diverted towards the EPS.
  • Central Govt. also contributes 1.16% of employees’ monthly salary.
  • Maximum service for the calculation of service is 35 years.
  • No pensioner can receive more than one EPF Pension.

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June 2022
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