Is the New PF Ceiling Wage Increase Putting Too Much Pressure on Employees?

Dear All,

After increasing the PF ceiling wages from Rs. 6500/- to Rs. 15000/-, PF deduction has risen from Rs. 780/- to Rs. 1800/- (if basic is more than 15k). Is this increment burdening for employees? In our company, all employees say it's too much.

Madhushree,

Presently, it is a burden, no doubt, but the same amount is from the employer. The rate of interest is also good.

Ramakant

But I heard that PF amount will be received only after reaching retirement age, not before. What if a financial emergency arises?

Hi Madhu,

If the basic amount is above 15000/-, then you can restrict the contribution to 15000/-; if it is less, then you have to pay 12% on the wages. There have been extensive discussions regarding the burden, but there is no other option. It is also a way for employees to save for the future.

PF amount can be withdrawn under the following conditions:
- Medical Emergencies
- Marriage
- Purchase or construction of a house
- Self or kids' marriage
- Higher education purposes

Please let me know if you have any questions or need further clarification.

Thank you.

Provisions for Availing Non-Refundable Loans from PF

I shall quote the various provisions to avail non-refundable loans from PF, provided a minimum employee contribution (with interest) of Rs. 1000 is lying with PF.

1. **68(B)** - Towards house construction/purchase/plot purchase, etc. Minimum service required - 5 years. Amount admissible - 100% of both employee and employer contribution.

2. **68(H)** - Towards 2 months or more lockout (due to reasons other than strike). No minimum service. Amount admissible - 6 times of basic + DA or employee contribution, whichever is less.

3. **68(J)** - Towards one month hospitalization, major surgical operation, diseases like leprosy, TB, cancer, mental retardation, etc. No minimum service, but for out-of-ESI coverage members. Amount admissible - 6 times of basic + DA or employee contribution, whichever is less.

4. **68(K)** - a) Towards post-metric education of children.
b) Towards own/brothers'/sisters'/children's marriage. Maximum three times in service. Minimum service required - 7 years. Amount admissible - 50% of employee contribution.

5. **68(N)** - Applicable for physically handicapped individuals towards the purchase of equipment to reduce handicapness. Amount admissible - 6 times of basic + DA or employee contribution or cost of the equipment, whichever is less.

6. **68(NN)** - After attaining the age of 54 years and before one year from the date of superannuation, whichever is later. Amount admissible - 90% of both employee and employer contribution.

Regards,
Abbas. P. S.

Dear Madhushree,

Understanding the Importance of Provident Fund (PF)

First, you need to start believing that PF is not a burden. The amount comes in handy when a person retires as they receive a pension and also a lump sum amount. This is not possible if everyone starts believing that PF is a burden. Most of the people who think that way are job hoppers or freshers. I understand the need for more money in hand for freshers, but for hoppers, this is just an excuse. It is a forced benefit that holds value when the income stops flowing as it currently does.

Regards,
Ashutosh Thakre

Dear Seniors,

Greetings to all.

One of our employees has been working in our company for the past 2 years. Previously, he had worked for 4 years in another company, and the EPF amount from that period has been transferred to his current EPF account. My question is, is he eligible for a loan from EPF for the purchase of a flat? (Loan eligibility requires a minimum of 5 years).

Regards,
Karthik

Dear Karthik,

If the PF has been transferred, then he is eligible as it says that the 5 years criteria is for continuous 5 years. Here it is 4+2, totaling 6 continuous years. It does not make a difference if those 5 years are in the same company or different companies.

Regards,
Ashutosh Thakre

Dear Madhu,

PF is not a burden; it is a social security benefit that every employer needs to provide. Both the employee and employer contribute the same amount towards PF. Either you can restrict the Basic to Rs. 15,000/- or irrespective of Basic, 12% will be deducted from the Employee's Basic.

Regarding withdrawal, it is already mentioned under what circumstances he/she can withdraw.

Warm regards,
Pranab Chakraborty
9404384433

Never ever think PF is a burden; it is a boon for private sector employees as it allows you to receive a pension during retirement. As many of my colleagues have mentioned, it can be used in part during times of financial crunch, as explained.

Please remove the idea that contribution towards PF is a burden. I believe it is one of the best means to save for your retirement age when you need more money for you and your spouse's livelihood. Many employees are contributing more than 12 percent with a view to save more for their future. There is no end to spending. This has to clearly sit in the minds of the employees as long as they are in service. We have been seeing many retired people not being taken care of by their children, and poor, elderly people living in very bad conditions.

Regards,
B. SREENIVASULU