What do you think about Provident Fund?

Different perception on Provident Fund – What do you think about PF?

Different minds different perceptions, perceptions can be changed when you look at a particular thing from all sides and understand well about it. Here I’m talking about newcomers in the industry and their perception towards EPF (Employees’ Provident Fund). They are more concerned about their “In-hand salary” and consider EPF as an unwanted component in their salary structure. This might be due to a lack of information about the PF benefits or misconception about it.

Till now what I understood from employee’s mindset is-

This is one side of the coin, but one must see both sides of the coin. In short, nowadays employees are only looking after non-favourable things because they have already made their mindset about the PF concept. And so, they are not even bothered to understand the benefits of it. In actuality, PF is an important component in the salary of an Employee.

Let me highlight a few points-

• EPF is to safeguard your future, to help you in your retirement age, and also your family in case of your death.
• EPF is a Tax saving component, in fact, a good way of saving your money.
• The interest rate in EPF is much better than any Bank Saving Account or FD interest rate.
• You can withdraw your EPF amount if you are unemployed for more than one month.
• You can withdraw a certain amount from the EPF account for a medical emergency at any time without a lock-in period.
• The amount can be withdrawn for Construction/Purchase of New House, Renovation of House, Repayment of Home Loan, Wedding purpose with prescribed limits, and lock-in period.

Many will think that we do have better options for saving, then why PF? That’s true, we do have many options for saving. To add, even I have invested in other financial instruments like LIC, FD’s & Mutual Funds. I’m not saying it is the only best option for saving but yes, it is the safest option of saving as it is managed by the Government and in the interest to safeguard your retirement age.

If you are not a member of EPF, go for PPF through Post Office or choose from your trusted bank. Benefits are there in every investment. Only you, need to understand your financial needs and invest accordingly.

Newbies in the industry should understand this fact, the EPF component is not to reduce your in-hand salary, it’s an investment for your benefit. It takes a small contribution from your salary and at the same time your employer contributes to it and that amount is gets saved in your EPF account.

Don’t worry about the procedures as things are changing. EPFO member portal is the solution for all your needs. Online transfer/withdrawal claims can be done easily now. You can check your balance in the passbook anytime, update KYC, edit personal details in it, etc. You do not need to withdraw your PF amount while changing jobs, just transfer it to a new account with the same UAN, and even if there is no contribution in your account you can earn interest on your PF balance for 3 years.

My experience says,

Well, when I left my previous organization after serving 3.6 years, I withdrew my PF balance because in the next company I was working on Professional Fees, therefore, no PF account was there. So in PF, I was unemployed hence could withdraw my money. Trust me it was an awesome feeling to get a handsome 5-digit amount in my bank account, from EPFO where a small part of my salary was getting contributed every month.

Hoping that the above content helped you to know a few benefits about EPF and its need.

Farhin Khan is the HR Manager at qSEAp Infotech pvt. ltd.