Is It Legal for My Employer to Allocate All Contributions to EPF and None to Pension? What Are the Pros and Cons?

Hi, I downloaded my EPF passbook, and it shows that my employer contributes the entire deduction (entire matched amount) to EPF and 0 towards Pension. Is this legal? Are there any pros and cons of doing this from an employee's point of view, and why might they be doing it? It's been going on for some time, as per the entries in my passbook. My previous employer put a higher amount in Pension and a lower amount in EPF, but they split it every single time. Is this better, or is the one going on better?

Regards.

Employer Contributions to Pension Fund

If your previous employer has contributed to the Pension Fund, your current employer should also continue contributing to the Pension Fund, even if your salary exceeds Rs 15,000. Whether to contribute on a salary higher than Rs 15,000 or not is a decision to be taken by the employer. Unless you had an agreement about it as part of your employment contract, the employer's act of contributing based on Rs 15,000 (which is Rs 1,800 per month) is unquestionable. However, when doing so, the employer should contribute Rs 1,250 to the Pension Fund and the remaining Rs 550 of their contribution to the Provident Fund, along with your contribution of Rs 1,800.

Checking Previous Contributions

Please check whether you informed the employer of your contribution to the Pension Fund in your previous company. Also, see if you provided Form 11 of EPF, declaring your existing PF account with a Universal Account Number and other details.

Post-September 2014 Joiners

If you joined after 1st September 2014, then you are not entitled to receive a pension. In such cases, if your previous employer contributed to the Pension Fund, that act should be void. In that scenario, the amount contributed to the Pension Fund will be redirected back to your Provident Fund.

Hi, The last employer contributed $550 to PF and $1250 to the pension. The current one sends the entire $1800 to PF and nothing to the pension. Also, the current one started doing it a couple of months after I joined. The first few months, they contributed $550 to PF and $1250 to the pension. Now, it's all to PF. I don't understand the whys and why nots. Is there any benefit of doing it this way, either to the employer or the employee - when you send the whole amount into PF?

Regards

Have you at least tried reaching out to the HR or Payroll team to get clarification before second-guessing them and asking us?

Yes, I did not. I started after September 2014. Neither did you. Why does one organization split the amount, while the other does for a while, and then doesn't all of a sudden? Is it beneficial to either them or me, this way?

Then, you say, post-2014 entrants aren't entitled to a pension, then why was 1250 going into it—not just from the last one but for a little while from the current one as well?

This just makes everything seem VERY DICEY!!!

Dear Employee, You seem to be confused. Please contact your HR Department, and they will clarify everything for you.

Hi Alok, HR or finance didn't help. Neither could they justify or clarify anything. Why do you think I am here?

Regards

Your first organization made an error in depositing their contribution. You are not eligible for a pension, but you can claim the Rs 1250 wrongly paid to the Pension fund, which will be redirected to your pension fund. This was only a clerical error.

Hi Alok, HR or finance didn't help, and neither could they justify or clarify anything. Why do you think I am here?

How exactly do you expect us to know whether you did ask them and what reply did they give? If you gave a rude reply, then you will not get a response from members. It is surprising they did not give a reply. Can you share what their response was?

Also, if you have your Form 11 filled when you joined the company, please share the same (if possible).

As for the original problem, you can get the balance amount transferred to the PF account from the pension account. Also, there is a new notification allowing employees to opt for NPS if they wish; you may check the same and decide your course of action.

Regards, UnQuote