Employee Provident Fund (EPF)-Changed rules from 1st Sept 2014
EPF is now mandatory to all those whose salary is less than Rs.15,000
Recently Employee Provident Fund Organization (EPFO) changed few rules related to EPF, EPS and EDLI. These changes will come into effect from 1st September 2014.
Below is the graphical representation of how your EPF contribution along with employer contribution will get distributed monthly.
Please note that Salary for this purpose means Basic along with DA.
The above four changes in detail.
1) EPF is now mandatory to all those whose salary is less than Rs.15,000
Previously the limit was Rs.6,500. But this is now raised to Rs.15,000. So whoever falls below Rs.15,000 of salary per month then they will have to contribute compulsorily to EPF Scheme.
2) Minimum monthly pension will be Rs.1,000 per month.
Under new rules, widow of a member will get a minimum monthly pension of Rs.1,000. For children it is fixed Rs.250 and orphans it is Rs.750 per month. Also to arrive at pension, salary will be average of 60 months last drawn salary instead of earlier rule of last 12 months average salary.
3) Insurance coverage to member increased to Rs.3,00,000
Earlier each member who is part of EPF scheme had a insurance coverage of Rs.1,56,000. This insurance coverage now raised to Rs.3,00,000.
4) EPS contribution from employer raised
Earlier whether your salary was Rs.6,500 or at higher level, employer used to contribute fixed EPS contribution of Rs.541 i.e 8.33% of Rs.6,500. This is increased now to Rs.1,250 i.e. 8.33% of Rs.15,000.
Overall effect on you will be lesser take home salary. Because earlier whoever earning more than Rs.6,500 might contributed 12% of Rs.6,500. But now onward it will be 12% of your salary if you fall under Rs.15,000 and if more than Rs.15,000 then too 12% of Rs.15,000. So more outgo towards EPF and less take home. But do remember that you are indirectly investing rather than spending. So be happy