Understanding PF Contribution Rates
I had an interview at a reputed company, and the HR manager asked me a question related to PF. The question was why there is a 12% contribution from both the employee and employer sides, and why not 10% from either side. Please provide me with the exact reason.
With regards,
Paras Thakur
From United States, Ashburn
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2I had an interview at a reputed company, and the HR manager asked me a question related to PF. The question was why there is a 12% contribution from both the employee and employer sides, and why not 10% from either side. Please provide me with the exact reason.
With regards,
Paras Thakur
From United States, Ashburn
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Employee: 12%
Employer: 13.61%
Contribution:
- 3.67% = Provident Fund (A/c No.1)
- 8.33% = Pension Fund (A/c No.10)
- 0.5% = EDLIS - Employees Direct Linked Insurance Scheme (A/c No.21)
Administrative Charges:
- 1.10% of emoluments = Provident Fund (A/c No.2)
- 0.01% of emoluments = EDLIS (A/c No.22)
Total: 25.61%
From India, New Delhi
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Employer: 13.61%
Contribution:
- 3.67% = Provident Fund (A/c No.1)
- 8.33% = Pension Fund (A/c No.10)
- 0.5% = EDLIS - Employees Direct Linked Insurance Scheme (A/c No.21)
Administrative Charges:
- 1.10% of emoluments = Provident Fund (A/c No.2)
- 0.01% of emoluments = EDLIS (A/c No.22)
Total: 25.61%
From India, New Delhi
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Dear Sir i know these contribution as u have written but question is not related to contribution but it is related to the reason behind of fixation of 12%. Plz kindly let me know.... Regards paras
From United States, Ashburn
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From United States, Ashburn
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The answer is ,12% is decided by the govt.It can increase it or decrease it. Varghese Mathew 9961266966
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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The Origin and Evolution of the EPF Scheme
The EPF scheme was originally envisaged as a savings plan that would be useful for the workforce at the time of their retirement. Since there were no other facilities like postal savings, LIC, or banking existing at that time, and most of the employees were not educated to keep savings, it was thought that out of one year's earnings, one should provide a month's wages as savings for old age (i.e., 8.33%). The percentage was subsequently increased to 12% in stages. Various ILO conventions have also influenced this regard. Full details can be understood by reading about the Trade Union movement in the pre-independence period and the preambles of various welfare-oriented acts enacted at that time.
Regards,
M.Venkatraghavan
From India, Selam
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The EPF scheme was originally envisaged as a savings plan that would be useful for the workforce at the time of their retirement. Since there were no other facilities like postal savings, LIC, or banking existing at that time, and most of the employees were not educated to keep savings, it was thought that out of one year's earnings, one should provide a month's wages as savings for old age (i.e., 8.33%). The percentage was subsequently increased to 12% in stages. Various ILO conventions have also influenced this regard. Full details can be understood by reading about the Trade Union movement in the pre-independence period and the preambles of various welfare-oriented acts enacted at that time.
Regards,
M.Venkatraghavan
From India, Selam
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FAQ ON PF REDUCTION OF CONTRIBUTION 12% TO 10#.pdf