Things to Know about - PROVIDENT FUND (for employees)

With booming of the job culture, there are many organisations mushrooming everywhere who are recruiting people for their organisation. Freshers who join in the rush of the job culture are sometimes not aware about the various facilities provided by the organisations, and some are not aware IF an organisation should provide some of the facilities.

One such facility to be provided by any organisation under Indian Constitution is the Provident Fund Scheme. Every person who joins any organisation feels that there should be Provident Fund Scheme from every company, otherwise that company or organisation is not effective enough.

What is a Provident Fund and who should be getting it ? Which are the companies who fall under this scheme ?

Provident Fund is a reserve which was set up by the government for the people who retire after working under it. It was found that after spending the golden years of their life in an organisation a person got retired and had to depend on their relatives or children for the rest of their lives. This fund was made for such people who would be able to enjoy their life independently after retirement.

Thus the Government of India under Ministry of Labour and Employment formed a statutory body - Employees' Provident Fund Organisation (EPFO). The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 came into effect on 4th March 1952. The Organisation is administered by a Central Board of Trustees, comprising of representatives of the Government of India, provincial governments, employers and employees. The Board is chaired by the Union Labour Minister of India.

Provident Fund For Employees:

For New Entrants:

• Enrolment: An employee is eligible for membership from the day he joins the covered establishment.
  
  
• If the employee’s emoluments exceed Rs. 6,500/- per month, he has the option to join the Scheme(s) with the consent of employer.
  
  
• Declare previous employment details, if any, in Form No. 11 to the employer.
  
  
• On becoming a member of the Schemes file details in Form No. 2 ( family particulars/ nominations) through the employer.
  
  
• Rate of contribution payable by a member shall be @ 12% of his emoluments.
  
  
• A member can contribute statutarily over and above the prescribed rate.
  
  

For Existing Members:

• Enrolment:
  
  
• Any change in the family status, such as, -
  
  
  • marriage of the member.
    
    
  • additions / deletion in the family.
    
    
  • Legal adoption of the children.
    
    
  • Change of nominee, is to be filed in Form No. 2 through the employer.
    
    
• In the event the member is holding a Scheme Certificate (under EPS, 95), he should surrender the same to the concerned EPFO office, through his employer.
  
  
• A member is entitled to various benefits & facilities such as withdrawals, advances, pensions, death insurance etc.

APPLICABILITY OF EMPLOYEES' PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT '1952

The Employees' Provident Fund and Miscellaneous Provisions Act 1952 applies to the whole India except Jammu & Kashmir.

Employees' Provident Fund and Miscellaneous Provisions Act 1952 is applicable to:

• Every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by Central Government in the Official Gazette. (List of Industries/Establishments)
  
  
• Employing 20 or more persons .
  
  
• Cinema Theatres employing 5 or more persons.
  
  

The Act does not apply to:

• The co-operative societies employing less than 50 persons and working without the aid of power. 16(1)(a)
  
  

The establishment to which this Act applies shall continue to be governed by this Act , even if the number of employees falls below 20 at a later date. [ 1(5)].

16(1)(b) Establishments under the control of state/central Govt.& employees who are getting benefits in the nature of 16(1) (b) contributory P.F. or old age pension as per rules framed by the Govt.

16(1)(c) Establishment set up under any central, provincial or state act and the employees who are getting benefits in the nature of contributory P.F. or old age pension as per rules.

Voluntary Coverage

If any of the establishment is not satisfying the above two conditions for coverage and if the employer and majority of the employees are willing , the Act may be applicable to such establishment ( voluntary coverage under section 1(4) )

Rates of Contribution:

a) The Employees' Provident Fund Scheme

In respect of establishments employing 20 or more persons and engaged in industry notified under Section 6 of Act ( other than the Establishments. declared as sick ) 12% of the basic pay DA , Cash value of food concession and retaining allowance , if any, subject to a maximum of Rs.6500/- per month. Voluntary higher contributions are also acceptable at the joint request of the member and the employer . However, the rate of contribution is 10% in respect of the following categories of establishments:

• Any establishment covered prior to 22.9.97 in which less than 20 persons are employed.
  
  
• Any sick industrial company as defined in Clause(0) of Sub-Section(1) of Section 3 of the sick industrial companies ( special provisions ) Act 1985 and which has been declared as such by the Board for Industrial and Financial Reconstruction.
  
  
• Any Establishment which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth.
  
  
• Any Establishment engaged in manufacturing of (a) Jute , (b) Beedi , (c) Brick , (d) Coir (other than spinning sector), (e) Guar Gum Industries/Factories.

b) The Employees' Pension Scheme

From and out of employer's share of Provident Fund contributions 8.33% of the total wages limited to Rs. 6500/- per month is segregated and credited to the Employees' Pension Fund in A/C No. 10 ( w.e.f. 1-06-2001 ).

The Central Government also would contribute at the rate of 1.1 / 6% of total wages.

c) Employees' Deposit Linked Insurance Scheme:

No amount is recovered from employee's wages . Employer should pay 0.5% of total wages subject to a ceiling of Rs. 6500/- per month ( w.e.f. 1-06-2001 ).

SUBMISSION OF RETURNS

FORM NO.	DESCRIPTION	PURPOSE
2	Nomination form. (Common form for PF & Pension schemes.)	This is given by PF Members and utilised for releasing PF dues to the nominees. It also contains the details of the family members.
11	The Employees' Provident Funds Scheme, 1952 [para 34].	Declaration by a person taking up employment in an establishment in which the Employees' Provident Funds & Family Pension Fund Scheme is in force.
Pension
F9	The Employees' Pension Scheme 1995[para 24] .	Declaration by a person taking up employment in an establishment in which the Employees' Pension Scheme is in force.

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