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Employees’ Provident Fund (EPF)
GS III: Indian economy, Employment, Growth & Development, Poverty, Education, Skill Development, Human Resource


  • The Employees’ Provident Fund (EPF) is a social security and retirement savings scheme in India.
  • It is administered and regulated by the Employees’ Provident Fund Organisation (EPFO), which operates under the Ministry of Labour and Employment, Government of India.
  • The EPF scheme was established to provide financial security and stability to employees in the organized sector during their retirement and to help employees accumulate savings over the course of their working years.
  • Here are some key points about the Employees’ Provident Fund (EPF) in India:
    • Mandatory Contribution
      • Both the employer and the employee are required to contribute a fixed percentage of the employee’s basic salary (plus dearness allowance, if applicable) to the EPF account.
      • As per the last update in September 2021, the contribution rate was 12% of the basic salary from both the employer and the employee.
    • Voluntary Contribution (Voluntary Provident Fund – VPF)
      • Employees have the option to contribute more than the mandated 12% of their basic salary to the EPF voluntarily.
      • This is called the Voluntary Provident Fund (VPF), and the additional contribution attracts the same interest rate and tax benefits as the EPF.
    • Tax Benefits
      • The contributions made to the EPF are eligible for tax deductions under Section 80C of the Income Tax Act, up to a specified limit.
      • The interest earned on EPF contributions is also tax-free.
    • Interest Rate
      • The EPF interest rate is decided by the government and is subject to periodic revisions.
      • The interest is compounded annually and is typically higher than most other fixed-income savings instruments.
    • Withdrawal Rules
      • While the primary purpose of EPF is to provide retirement benefits, partial withdrawals for specific purposes, such as purchasing a house, medical emergencies, education, or marriage, are allowed under certain conditions.
    • Universal Account Number (UAN)
      • Each employee covered under the EPF scheme is allotted a Universal Account Number (UAN) to facilitate easier management and tracking of the EPF account throughout their employment.
    • Online Services
      • EPFO offers various online services, including checking EPF balance, submitting claims, and updating KYC (Know Your Customer) details, making it convenient for employees to manage their EPF accounts.
  • It’s essential to keep in mind that policies and regulations may change over time.
  • So, it’s best to refer to the official EPFO website or consult with the concerned authorities for the most up-to-date information on EPF in India.
  • The Employees’ Provident Fund Organisation (EPFO) in India administers several schemes to provide social security and financial benefits to employees in the organized sector.
  • Here are three major schemes operated by EPFO:
    • Employees’ Provident Fund (EPF) Scheme:
      • The Employees’ Provident Fund (EPF) Scheme is the primary and most well-known scheme operated by EPFO.
      • Under this scheme, both the employer and the employee are required to contribute a portion of the employee’s basic salary (plus dearness allowance, if applicable) to the EPF account.
      • The contributions are made monthly and attract a fixed rate of interest declared by the government from time to time.
      • The EPF scheme aims to create a retirement corpus for employees, providing them with financial security after their working years. 
    • Employees’ Pension Scheme (EPS):
      • The Employees’ Pension Scheme (EPS) is a complementary scheme to the EPF, which provides pension benefits to eligible employees.
      • A portion of the employer’s contribution (8.33% of the employee’s basic salary) is directed towards the EPS.
      • The scheme offers a monthly pension to employees upon attaining the age of 58 or after completing a minimum of ten years of service, whichever is later.
      • In case of the employee’s unfortunate demise before retirement, the pension benefits may also be extended to the spouse and dependent children.
    • Employees’ Deposit-Linked Insurance Scheme (EDLI):
      • The Employees’ Deposit-Linked Insurance Scheme (EDLI) is designed to provide life insurance coverage to EPF members.
      • Under this scheme, a life insurance benefit is payable to the nominee or legal heirs of the employee in the event of the employee’s death while in service.
      • The insurance coverage is linked to the EPF contributions made by the employer and is subject to a maximum limit, which is periodically revised by the government.

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