In just about a month, workers wouldn’t have to worry about the Provident Fund (PF) account transfer as it will get done automatically.
Gone are the days when employees had to get Form 13 signed from the ex-employer and submit to the present employer or initiate an online transfer of funds. In just about a month, workers wouldn’t have to worry about the Provident Fund (PF) account transfer as it will get done automatically, reports The Times of India.
According to chief provident fund commissioner VP Joy, the main hurdle before them is premature closure of accounts which happens after employees change their jobs. Employees have to take care of a lot of paperwork before joining a new company and amid all the tension, people close their accounts and restart it later.
To avoid this, Employees Provident Fund Organisation (EPFO) is taking efforts to make the whole transfer process employee-friendly. Automatic PF account transfer will let employees continue with their accounts and not open new accounts without transferring funds.
Among other things, now Aadhaar is also mandatory to enrol for EPF. As per Joy, PF account is permanent and can be used for social security. He also advised that money should only be withdrawn from the account for important purposes like housing, education, hospitalisation or marriage.
In a bid to create jobs, the government is taking a slew of measures, one of which is increasing its contribution to the Employees’ Provident Fund (EPF). For new employees, the government under the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) will give additional 1 percent of their basic pay.
What is the PMRPY scheme?
Under this scheme, the government takes care of the employer’s component. So, the EPF contribution for the workers that come from the employer is paid by the government to encourage firms to recruit unemployed persons. The scheme also helps to bring the informal workers in the payroll. The scheme is applicable for workers with a salary of up to Rs 15,000 per month for a period of three years.
What is the breakup?
The employers’ share of EPF kitty can be divided into five components-
Employees' Pension Scheme (EPS) – 8.33 percent
Employee Provident Fund (EPF) - 3.67 percent
Administrative charges- 0.65 percent
Employees’ Deposit-linked Insurance Scheme- 0.5 percent
EDLI maintenance- 0.01 percentUnder PMRPY, out of the five components government provides EPS share and this benefit is extended to all new recruits in a firm.