EPFO Latest Update: This question comes in the mind of every youth who starts a job that his company will deposit money in the account equal to the PF contribution deducted from his salary. However, when he receives an SMS about the amount deposited in PF, then confusion starts after seeing it. Today we will try to clear this confusion by quoting experts.
Sandeep Kumar, a resident of Pune, recently completed his studies and started a job in a tech company at a good package. Sandeep was eagerly waiting for his first salary and at the same time some preparations were going on in his mind for the future.
The month was over and the company deposited the first salary in Sandeep’s bank account. The happiness of salary was visible on Sandeep’s face, but as soon as the salary slip came, he was blown away to see that there is some confusion in the deduction in PF. Actually, Sandeep knew this and the same thing was recorded in the offer letter received from the company that 12 percent of his basic salary would be deducted and deposited in the provident fund account.
Now when the salary slip came in his hand, seeing it, Sandeep’s maths got messed up. He felt that the company had cheated him, because the amount that had come to the PF account after deducting his basic salary, was not visible from the company’s side. So, does the contribution of the company remain low or does the money deposited by it go somewhere other than the PF account of the employee. Like Sandeep, such questions must have arisen in the minds of many salaried people. Today we are telling you the solution by quoting experts.
The employer also contributes 12 percent, investment matters expert Balwant Jain says that there is no doubt in this matter that the company also contributes to the PF equal to 12 percent of its basic salary to its employee. But, where the entire 12 percent amount deducted by the employee is deposited in his PF account, the entire contribution made by the employer does not go to the PF account of the employee. That’s where the whole confusion starts.
So where does the money go?
Actually, out of the 12 percent contribution given by the employer to the employee, 3.67 percent amount goes directly to the PF account of the employee. At the same time, 8.33 percent part gets deposited in the pension scheme of the employee and this amount is not visible to the employee in his PF account. Out of this contribution of the employer, 0.5 per cent is deducted as Employee Deposit Linked Insurance, 1.1 per cent as EPF Administration Charge and 0.01 per cent as Employee Deposit Linked Insurance Scheme charges.
On retirement, the employee gets the full part of his contribution and the remaining part deposited after deducting the pension contribution from the employer. At the same time, pension is distributed to the retired employee every month from the amount deposited in the pension fund.