Is Provident Fund Deduction Mandatory for Employees Working Past Retirement Age in India?

Provident Fund Deductions for Employees Beyond Retirement Age

We have a situation where we are continuing a few employees beyond their age of retirement. We are very keen to continue our employees if they are willing to work for us and are physically fit for employment. This would be a continuation of service without any break. We would be grateful if you could please advise us whether it is mandatory as per Indian law (PF Law & Labour Law) to deduct Provident Fund after the age of 60 for such employees. Also, if you could share a link or attachment copy of the law, that would be very helpful.

Regards and thank you,
SACHIN GHAG

As per PF rules, you need not deduct or pay PF to people who are above sixty. The logic is that PF is meant for the benefit as a saving after retirement, and since the person is already sixty, you may follow accordingly.

Dear Sir,

May I request you to please advise where I can find the above-mentioned PF rule? I need to forward this to our HR in the overseas market. I have received a few different opinions on our portal. Most of those are saying that PF is mandatory but not EPS (PENSION) after 60 years of age.

I tried to find information on the PF website but had no luck. Is there any document that can explain it in detail?

Regards, SACHIN GHAG

Dear Mr. Sachin,

You can retain employees above the retirement age and can deduct and contribute to PF only. There will be no contribution to the Pension fund by the employer.

Regards,
Bhupinder Kumar

Dear sir,

In this situation, both the contribution shares (Employee and Employer) will be submitted in the Employee Provident Fund Account only. There is no need to deposit the pension fund in this case. Also, he can get the pension from the department as he was already a member of the pension scheme and has reached the retirement age.

Regards,

Up to the age of 60, PF is compulsory. After 60, the company can extend the benefit, but the company also has to bear 12% of its share of PF. Only a member contributing is not permitted. Both the employee and employer must contribute an equal share, and in that case, you can continue the PF as long as you want. As we faced a similar situation, we have clarified the matter as mentioned above with the appropriate authorities.

Dear all,

If someone is working and drawing a salary/wage after attaining the retirement age, he is required to contribute to EPF. Both shares of contributions will go to his EPF account, and contribution to his EPS will be stopped/fringed at the age of 58 years. He can apply for a monthly pension at the age of 58 years, and EPF accumulations will be withdrawn after he actually retires.

P.K. Sharma

Discontinuation of PF: Key Factors

Discontinuation of PF depends on the following factors:

1) If the employee is an excluded employee. Now, the question is, who is an excluded employee? As per the PF Act, if the employee starts his/her career above the coverage limit salary, which is currently Rs. 15,000/- Basic & DA per month, they are considered an excluded employee. This includes someone who was a member but settled their PF and then rejoined above the coverage limit, or someone who retired after reaching the age of 55 years (please verify as this may have changed) and settled the PF.

2) In your case, it involves the continuation of service without a break as a PF member. If the PF membership remains unbroken, then the EPF will be settled after reaching the age of 58 years, and the PF should continue, with the entire contribution of PF & EPF being deposited into the PF fund only.

3) It is always preferable in the case of continuation after reaching the retirement age to formally retire and settle the PF. Then, a reappointment can be made with fresh or the same terms and conditions, making it much easier to handle the situation.

Thanks & Regards,

S K Bandyopadhyay

USD HR Solutions

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