The Employees' Provident Funds and Miscellaneous Provisions Act, 1952, does not allow an employee who did not opt for PF membership upon joining an organization, especially when their basic salary exceeds the threshold, to become a member after 5 years of service. This restriction is in place to maintain the integrity and purpose of the PF system, which is primarily designed to provide social security benefits to employees during their active service years and post-retirement.
The rationale behind this restriction is to prevent misuse or circumvention of the PF system for short-term gains or tax benefits. Allowing employees to join the PF scheme after a significant period of service could lead to strategic manipulation of contributions for tax planning purposes, which goes against the core principles of the PF Act.
While it may seem restrictive from an individual perspective, the overarching objective is to ensure the long-term financial security of employees by promoting consistent and sustained savings through their employment tenure. By adhering to the eligibility criteria set forth in the PF Act, both employers and employees contribute to a stable and reliable social security framework that benefits all stakeholders in the long run.
In conclusion, the PF Act's provisions aim to uphold the integrity and sustainability of the PF system by regulating membership eligibility based on predefined criteria. It is essential for organizations and employees to comply with these regulations to foster a secure and transparent environment for financial planning and retirement benefits.