A brief introduction to PF

A brief introduction to PF

Provident Fund

Provident Fund is a compulsory Government managed Social Security scheme for employees, who contribute a part of their salary towards their retirement fund every month. These monthly savings get accumulated every month, annually Interest is credited to the PF Account.

To calculate Provident Fund, you must add the contributions of both the employer and employee.

According to the Rules, 12% of your PF Salary will go towards provident fund. The company is also required to contribute the same 12%, out of which 8.33% would go towards the Employee Pension Scheme or EPS and remaining 3.67% is credited into the PF Account. 

The monthly contribution can be restricted to PF Salary of INR 15,000/-
Salary for PF Calculation is
Monthly Fixed Gross – Monthly HRA

The benefits of this fund are as follows:
·         Retirement Fund – At the time of retirement accumulated contribution along with Interest is paid.
·         Life-time pension from the EPS for the member
·         Widow Pension post death of member
·         Non-refundable loan for Marriage, Higher Education, Hospitalization, construction / purchase of site / house / apartment, Payment of Life Insurance Premium
PF Calculation on Non- Restricted wages will be:
12 % of Basic + DA
PF calculation on Restricted Wages will be:
 If Basic + DA > 15000, PF = 12 % of 15000
b. If Basic + DA < 15000, PF = 12 % of (PF Wages or INR 15000 whichever is lower).