Starting a New Company: How Do I Set Up Employee PF Accounts and Understand CPF vs. PPF?

We are opening a new company. Where can I open a PF account for our employees? What is the procedure for it? Also, can you explain the difference between CPF and PPF?

Thanks,
Munali

Understanding CPF and PPF for Your Organization

CPF means Contributory Provident Fund, which is known as EPF under the provisions of the EPF Act - 1952. If your organization has 20 or more employees working on any day during the preceding twelve months of a calendar year and is also notified in the schedule of employment under the provisions of the said Act, it is mandatory. If the number of persons is below 20, you can cover the employees voluntarily under the said provisions. The employer should submit Form-1, i.e., the Registration Form, along with relevant documents and details of the principal employer particulars in the RPFO Office of your area to obtain a code number to cover your employees. After verification of records by the Enforcement Officer, a PF code number will be allotted to your organization to implement the scheme and comply with the same accordingly under the statutory provisions laid down as per the EPF Act - 1952 Rules.

PPF: A Personal Savings Option

PPF means Public Provident Fund, opted by the employee on his own accord for future savings in the long term. A PPF Account should be opened in any branch of SBI or Post Office with a minimum amount not less than Rs. 500/-. The maximum amount that can be deposited by any employee is up to Rs. 1,00,000 with an interest rate of 8.6% per annum for a period of 15 years.

Regards,
V R RAO PULIPAKA
[Phone Number Removed For Privacy Reasons].

In government, for their employees, PF will be deducted and there will not be any contribution from the employer (government) side. That's the reason they are paid with a pension. But in a private company, they will not give any pension to the ex-employees. That's the reason the Contributory PF was introduced. 12% from Employee PF, 3.67% from Employer PF, and 8.33% from Employer Pension Scheme (Total 24%), and in addition, the employer has to pay 1.1% as Administrative charges for PF, 0.5% as EDLI, and 0.01% as EDLI Charges (Total 25.61%).

8.33% remitted in the Pension Scheme will be accumulated, and 3.16% will be given by the Government for the Pension scheme for those retiring at 58 years. With that amount, the Corpus Fund will be created by the Government (EPFO), and the Pension will be given to the retired private company ex-employees.

Difference Between CPF and PPF

The PPF is like a Savings Account with 8.5% interest annually accumulated and a minimum of Rs. 500 and a maximum of Rs. 100,000 per annum you can deposit voluntarily either in SBI or in the Post Office. You can get the money only after 55 years, and in case of any emergency, you can get only a loan from this account.

Procedures are already explained by Mr. VR Rao Pulipaka, which you can follow.

Wish you all the best.

Regards.

Hi, thanks, Mr. Rao and Bhaskar, for the great explanation. Our organization started 2 months ago, and we have only 10 employees. We hired some senior employees, and they already have PF and Gratuity deducted from their salaries. Currently, our organization is not enrolled in any scheme. How can I align our organization with their PF and Gratuity contributions?

Thanks again.

Regards,
Munali Bansal

Claiming PF and CPF After Leaving an Organization

I am Vishali. For the last 5 months, I was working for an organization. During that period, they deducted ₹2800 CPF and ₹2800 PF from my salary. Now, I have received another job offer and left the organization. How can I claim my PF and also get the CPF? Please guide me.

Thanks,
Vishali

Aligning PF and Gratuity for New Employees

Thanks to Mr. Rao and Bhaskar for the great explanation. Our organization started 2 months ago, and we currently have only 10 employees. We recently hired some senior employees who were already contributing to PF and Gratuity from their salaries. As our organization is not currently under any scheme, how can I align with their PF and Gratuity?

Thanks again.

Regards,
Munali Bansal