The Employee Provident Fund (EPF), Employee Pension Scheme (EPS) and Public

Provident Fund (PPF) are some of the popular products to invest for the retirement
years.
In the past few months, radical changes have been introduced in these schemes.
Let us have a look at them.
1) PF portability: Every time you join a new company, you were given a new PF
number. Then you had the option of moving your funds to the new account.
Whether you did this or not affected the taxability of your PF deposits. Not any
more. Your PF accounts are now going to be portable. The Prime Minister Narendra
Modi is going to launch the much-awaited Universal PF Account Number (UAN)
website to enable PF portability on October 16. The UAN will be portable throughout
the working career of an employee. With the UAN in place, workers in the organized
sector need not apply for transfer of PF claim in case of job-change. This means, the
PF subscriber will not get a new number on joining a new firm. Instead the
employee will get an ID linked to UAN. So, this mechanism will help in smoothening
PF transfer claims. The new website is expected to provide an individual
personalized log-in mechanism to help in tasks like viewing updated PF amount,
transfer claims and updating KYC.
Currently, the EPFO is in the process of linking the UAN of its 40 million subscribers
with their bank accounts, Permanent Account Number (PAN), Aadhar and other
identification details.
2) Bank account and PF portability: The retirement fund body has asked
companies to provide bank account numbers of their employer members by
October 15. It has also asked for the IFSC or Indian Financial System Code number
for easy transfer of PF payment. The IFSC helps identify the branch where the
account is based. This helps transfer money easily. The bank account numbers with
IFSC codes will be linked to the Universal PF Account Number (UAN). This will help in
portability of PF accounts.
3) Higher PF wage ceiling: The retirement fund body Employee Provident Fund
Organization (EPFO) has raised the salary limit for maintaining a PF account to Rs
15,000. Earlier, the limit was Rs 6,500 per month. This means, any organized sector
employee earning up to Rs 15,000-a-month have to compulsorily hold an EPF
account with the government. For those earning more than Rs 15,000, it is a
voluntary option. This is to ensure that low-wage earners have a sufficient kitty to
help them in their retirement. This new measure is expected to bring in 50 lakh new
PF subscribers, according to the EPFO.
12% of an employees basic salary goes to the PF account and is payable back to
him/her together with interest once he/she leaves the company. The employer too
pays an equal sum 12% of the basic salary. Out of this, 8.33% goes into the
pension scheme and 3.67% into the EPF.
As of now, only organized sector employees are covered under the social security
scheme. They amount to about 8% of the total workforce. This still leaves the
majority of Indias workers in the unorganized sector without sufficient retirement

help.
4) Minimum monthly pension: Once the EPFO subscriber dies, his or her family
gets an amount on a monthly basis. The government has raised the minimum
monthly pension distributed to Rs 1,000 per month for the financial year 2014-2015.
This move will benefit about 28 lakh pensioners, especially widows, some of whom
get a paltry sum of Rs 150-200 a month.
5) Insurance limit hiked: Maximum sum assured under Employee Deposit Linked
Scheme, 1976 (EDLI) has been hiked to Rs 3 lakhs plus 20% ad hoc benefit over the
prescribed amount. This means in case of the death of the subscriber under EPFO,
his family is entitled to get Rs 3.6 lakhs instead of the current Rs 1.56 lakhs.
All employers to whom the Employee Provident Fund and Miscellaneous Provision
Act applies, have to mandatorily subscribe to the EDLI scheme to provide life
insurance benefit to their employees.
The above 3 changes have come into effect from September 1, 2014
6) PF interest rate: When you invest in a provident fund, you earn an interest.
The government fixes this rate on a yearly basis. For the year 2014-15, the interest
rate on provident fund deposits has been retained at 8.75%. This means, the nearly
50 million PF subscribers will earn 8.75% on their deposit amount this year.
7) Tax on PF withdrawal: If an employee withdraws his PF accumulation before
five years of completing service, the entire amount withdrawn will be taxable for
that year. However, if you transferred your PF every time you changed you job, your
total tenure of work will be calculated. For example, if you worked for a year at
company A and for four years at company B, and you transferred your PF, then a
total work-period of five years will be calculated.