Curious About Pension Fund Rules? Let's Discuss Eligibility and Interest Rates

Hi, I am Sharad. I am working as an HR executive in a company. I worked for 1.10 years in my previous company. There was a PF deduction, which was in two parts: one is PF and the other is a pension fund. I want to know if I will get my pension fund amount or not.

Questions About Pension Fund and PF Deductions

1) Is there any job duration limit that we should work for in that particular organization, such as 3 years or 4 years, before receiving the pension fund amount?

2) What is the percentage of interest that I will get?

3) In PF deduction, there are two parts: one is by the employer and one is by the employee. So, I want to know if the employer's part is also a part of my CTC or if it is excluded from the CTC.

Regards,
Sharad

Understanding EPF/EPS Contributions

Being an HR Executive, you must be aware of the fact that the contribution to EPF/EPS consists of two parts: employee and employer. The employee contributes 12% of his/her wages (basic + DA + food concession, if any). Similarly, the employer contributes the same 12% and also pays the administrative charges of 1.61% of EPF/EPS wages. The employee contribution is 12%, and the employer contribution is also 12%, further bifurcated into 8.33% for EPS (Employee Pension Scheme) or limited up to Rs. 541/- (i.e., 8.33% of Rs. 6500/- ceiling) and 3.67% (the difference between 12% and 8.33%).

- a) For claiming the pension fund, a contribution to the fund for 180 days is a must (whether 180 days are completed in 6, 7, or 8 months).
- b) The interest payment is only possible on 12% and 3.67%, not on 8.33% (pension fund) and the government's contribution of 1.17% of the worker's monthly wages.
- c) Yes, the employer's part is included in your CTC.

Thanks & Regards,
Sumit Kumar Saxena

For a contribution of 1.10 years to the Pension fund, the withdrawal benefit is 1.02 times the average salary of the last 12 months. To be eligible for the withdrawal benefit, there should be a minimum service of 1 year. Any service period of 6 months and above will be rounded up to 1 year. Therefore, the statement "For claiming the pension fund, the contribution of 180 days is a must (whether completed in 6, 7, or 8 months)" is incorrect.

Regards,
Abbas. P. S

Considerations for Provident Fund and EPS Withdrawal

Why are you thinking of withdrawing benefits from your PF and EPF already? You have just started your career, and you should continue to be a member of the Provident Fund wherever you work. You can transfer the funds from one company to another by applying in Form No. 13 through your employer. Ensure that you continue until your retirement at the age of 58. The Provident Fund is essentially the Bhavishyanidhi of your future. This will assist you in securing a monthly pension from your EPS contributions. If you have not contributed continuously for over three years, then you can consider withdrawing your PF and EPS.

Currently, the government is considering increasing the wage ceiling from Rs. 6,500 to Rs. 15,000 per month. This change will be more beneficial to the employees.

Regards,
Adoni Suguresh
Sr. Executive (Pers, Admin & Ind. Rels)
Labour Laws Consultant