Sustainable Social Future With Contributions to the Employees Provident Fund Organisation
For every sane person, they would want to secure a good future, either for themselves or for their dependents. As for workers, they use their earnings to save for a rainy day. With the cost of living rising to no end, there is no telling that any savings can last them a lifetime. That is why the Indian government came up with the Employees’ Provident Fund Organisation (EPFO). It currently manages three schemes, namely; Employee Provident Fund Scheme, Employee Deposit Linked Scheme and Employee Pension Scheme.
Employee Provident Fund Scheme
The Employee Provident Fund (EPF) scheme is among the first social security fund that came about after the EPF Ordinance was passed. It began as a pilot scheme back in 1948 for the Coal Mines Provident Fund. After it became a success, the government changed the name and brought it to other industries in stages. It came into full force in 1952 covering all sectors. The scheme requires employers and employees to contribute an equal amount which is ten to twelve per cent of the total wage. Each member that contributes to the EPF scheme will get to withdraw accumulated amount plus interest when they retire. Upon the death of a member, their nominees, usually their dependents will have access to the amount collected until the age of death together with interest. The EPF scheme allows partial withdrawals for other social factors such as illness, education, marriage and house constructions.
Employee Pension Scheme (EPS)
Even with the EPF scheme in place, the Indian government foresaw the consequences of allowing partial withdrawals. Should an employee frequently applies for withdrawals in his working lifetime, there would not be enough for his retirement. Hence, the Employee Pension Scheme is created for this sole purpose. The EPS came into effect in 1995. The employer makes all contributions to the EPS. The employer contributes approximately eight per cent of the employee wages into the employees’ EPS account. A member of the Employees’ Provident Fund Organisation will get benefits of the EPS when they retire at 58. But, before that, the members have to provide ten years of service, meaning receiving ten years of contribution to the EPS account when they reach 58 years old. Upon retirement, they will receive an EPS Scheme certificate which they will use to acquire monthly pension benefits. The EPS also covers for dependents pensions such as a Widow Pension, Child Pension, and Orphan Pension.
Employee Deposit-linked Insurance Scheme ((EDLI Scheme)
Members of the Employees’ Provident Fund Organisation have the opportunity to an insurance scheme governed by the Central Government. The objective of the EDLI is for the financial security of the dependent of the policyholder. The employers bear the contributions to the insurance scheme at a maximum Rs75. The insurance scheme covers the employee around the clock all around the world. The maximum benefit is twenty times the wage and capped at 6 lakh. The registered nominee will receive a lump sum amount if the policyholder dies. Otherwise, the amount will be paid to the legal beneficiary.
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