THREE REASONS WHY COMPANIES SWEAR BY EMPLOYEE PROVIDENT FUND OR EPF
Starting your first job can be one of the most exciting moments of your life, and with excitement comes stress. The stress of performing well as a beginner among a pool of experienced employees, managing your finances, and getting familiar with terminologies like the Employee Provident Fund or EPF. If you are confused about why companies deduct a small percentage of your total monthly income as EPF, keep on reading. The 1952 EPF and Miscellaneous Act allows Indian companies to take away a small percentage of their employees’ salary under the name of provident fund. The policy since then, has received both positive and negative reviews from the employees, as well as the employers. That said, let’s take a look at the positives EPF has to offer for the companies.
1. An excellent plan for retirement
As mentioned, the scheme uses the basic rule of deducting a part of the employee’s salary until they plan on leaving the organization. By accumulating a small percentage of their employees’ income every month, companies make up an excellent retirement fund for their employees. An EPF can be considered as a token of respect and appreciation to the employees who have been loyal to the organization for whatever period of time that they worked for.
2. Financial assistance in case of uncertain or uncalled situations
The 1952 EPF and Miscellaneous Act isn’t as strict as people believe it to be, as employees have the liberty to access their provident fund in case of accidents or other uncalled situations that may require money. Different companies follow different procedures. Therefore, you should contact your organization or employer to get more ideas about getting access to your provident fund before retirement. The portion allowed for access during unforeseen situations can be different for different companies and industrial sectors. The employee’s provident fund collected throughout their service is allocated to the employee’s account in case of their death to provide further financial assistance to the family.
3. Financial liberty in case of a prolonged period of unemployment
The best part about this policy is that the amount deducted every month from the employee’s salary is kept safely and can be used in case of prolonged periods of unemployment. If you decide to switch companies or plan on starting your business, there is a slight chance of things going south even with proper planning. In such situations, the provident fund accumulated by your employer can be of great help. You can only get a portion of your EPF’s balance in the first month, and it might take you several weeks to get the entire amount in your account.
This ends our article on the top three reasons why companies swear by the 1952 EPF and Miscellaneous Act. To know more about how you can access your PF’s information, try checking out the latest 5paisa blogs. With online portals allowing you to get access information about your provident fund within seconds, the scheme is getting more positive responses from the employees.