Can Employees Contribute to VPF if Excluded from EPF? Seeking Advice on Options

Dear Colleagues,

Here is the scenario: a few employees were excluded from EPF contributions since their salaries were beyond ₹6,500/- by issuing Form 11, and all these years it was fine from both ends (employee and employer). Now, the same employees want to deposit some amount on their own as savings every month through VPF by not having the liability from the employer end.

Question on VPF Contributions

Is it possible for any employee to contribute to VPF when they are excluded from the EPF account? Is there a way for it?

Regards

He would not be eligible to deduct VPF because his name is not registered in EPFO.

Thank you.

There is no voluntary contribution to PF by the employee alone.

Regards,
Varghese Mathew

An excluded employee is not a member of EPF. An employee who is not a member of EPF cannot contribute towards PF, including VPF. VPF is available only to members of EPF.

Thank you.

Dear Kumar ji, Can you please elaborate on how you have done it? For an employee who is not a member of PF, this means PF - member share is Nil, employer share is Nil. How did you effect the deduction towards VPF and how did you carry out the remittance? I think you may have misunderstood the query and the responses to it.

In my opinion, when such employees are not willing to have liability from the employer, they can invest any amount from their salary in any investment agency, including LIC. The employer can also deduct their contribution and deposit the same in any bank or may form a trust for such employees.

Employer Contribution and Permissions

In case the employer is interested in contributing his share as well, he can get permission from RPFC.

Regards,
Chandok AK
RPFC (Retd.)
[Link removed]

This means you agree with the contention of Kamlesh ji, Varghese ji, and myself.

This means you also agree with the contention of Kamlesh ji, Varghese ji, and myself. There are various investment tools available to employees but not VPF.

LIC's Salary Saving Scheme (SSS) is available subject to certain conditions.

LIC's Employer Employee Policy is available in which both Employer and Employee can avail IT benefit, subject to certain conditions.

With due respect to you, Sir, I would like to ask you why RPFC permission is required and under which section?

These employees will open a normal EPF account like any other employees and choose their VPF (say Rs. 10,000) as their subscription, but the employer's contribution (they are allowed to vary their VPF only once a year) will be restricted to only Rs. 6,500. Of course, ours is an EPF Trust. (As our Byelaws of the Trust provide for such things approved by the Commissioner, I don't think there is any violation in doing this). I'm not sure if there could be any restrictions in implementing VPF like this concerning non-exempted establishments that still have to remit to the PF kitty to the PF Commissioner's account. You can check that out with the PF Commissioner's office.

Regards,
Kumar S.

I was referring to the permission of the RPFC only in cases where the employer wants to make an excluded employee a member of the EPF at a later stage of employment. In that case, the employer will have to contribute their own share plus administrative charges, etc.

I have given a suggestion which may or may not be acceptable.

Regards,
Chandok

The issue was addressed succinctly by Mr. Varghese Mathew and Mr. Korgaonkar. However, the discussion has veered off into various other avenues of savings. In any case, unless your employer is willing to enroll these employees as members and take on the liability of complying with the provisions of the EPF & MP Act, there is no opportunity for them to save through VPF.

Regards

Dear Balakrishna Ji, I want to clarify that unless you become a member of the PF and both you and your employer contribute towards the PF, you cannot contribute towards the VPF. I believe HR professionals will agree with me and appreciate the views expressed by Varghese Ji, as well as those who support him.

Well, they are not eligible for deducting VPF, but if they do not want the employer contribution, then they can opt for PPF instead of EPF.

Dear friends, there is a distinction, as you all know, PPF is different from PF. Both are not the same. In PPF, there is no employer's contribution and pension attached as in every PF account. Let us not mix them.

Focus on VPF for Exempted Employees

The query is only about VPF for exempted employees, and we shall give our views only about it rather than deviating. We are not discussing all the savings schemes available.