Updated Apr 13, 2022

What is an Employee Provident Fund Organisation (EPFO)?

What is an Employee Provident Fund Organisation (EPFO)?

Employee Provident Fund Organisation (EPFO) is the statutory body and the World's largest Social Security Organisations responsible for managing Provident Funds in the country. The government of India made this organisation deal with the volume of financial transactions undertaken. It works under the Ministry of Labour and Employment. From 2019 to 2020, EPFO maintained 24.77 crore accounts of its members.

If you are confused about what a Provident Fund is. Let's get into the details of it.

A Provident fund is the amount deducted from an employee's salary by the firm. The employee receives this amount after retirement from the job or when they resign from it. EPF schemes in India are among the most popular ones to save some amount. Hence, it can be referred to as a savings scheme. It is regulated by the largest social security organisation known as the Employee Provident Fund Organisation.

Information about Employee Provident Fund Organisation

The Employees' Provident Fund was established in 1952 under the Employees Provident Fund and Miscellaneous Provisions Act. Every employee employed in an organisation can take advantage of this scheme. Individuals can withdraw and advance the Provident Fund in many cases. It includes retirement, education, financing, building houses, and medical care. The employee can become a member of the scheme by joining their jobs.

There are some rules for the employees for withdrawing the PF amount. A year before retirement and at the age of 54 years, they can withdraw up to 90% of the total Provident Fund. If changing establishments, they can also transfer the account of PF. But make sure the scheme is available at the particular place. The account number has 12 digits. But a person with more than one ID in the organisation they are working in, all IDs are taken into consideration as one single UAN number. Most importantly, the number doesn't change even when employees change their employer company.

Schemes of Employee Provident Fund Organisation

The Employee Provident Fund Organisation operates three major schemes. They are as follows:

1] EPF Scheme 1952

In EPFO Scheme 1952, partial withdrawals are allowed in some cases such as education, illness, housing, and marriage. Prime Minister Narendra Modi will launch a housing scheme for EPFO employees in 2022.

2] Pension Scheme 1995 (EPS)

Features of this scheme include a minimum pension for disabled individuals, survivors, widows, widowers, and children.

3] Insurance Scheme 1976 (EDLI)

In the Insurance scheme, money benefit is provided to the expired employees. At the time of death, the family member gets 20 times the amount of wages but a maximum of 6 lakh rupees.

History of Employee Provident Fund Organisation

The Employees Provident Fund Organisation was framed under section 5 of the Act. The history of this organisation starts from the first Provident Fund Act passed for the regulation of PF in the year 1925. But then the Royal Commission on labour focused on making a scheme for industrial workers. Therefore, the coal mines Provident Fund scheme was passed in 1948. Afterwards, it led to the expansion of the EPF scheme to other industries.

In 1952, the Employees' Provident Funds Bill was introduced in stages in Parliament. It was founded on 4 March 1952. The scheme aims to provide provident funds for employees in several establishments. Except for Jammu and Kashmir, the bill extended all over India, including various industries such as paper, steel, engineering, iron, cement, etc.

Structure of Employee Provident Fund Organisation

Employees Provident Fund Organisation consists of governments, employees, and employers representatives. The schemes are framed under a tripartite board known as the Central Board of Trustees, Employees' Provident Fund, and the representatives of five Central and fifteen State governments, ten Employers, and ten Employees. It works hand in hand with the Central PF Commissioner and Secretary of the board.

Currently, the organisation is divided into ten zones in the country implementing the scheme. They also work for the grievances faced by the people.

Conclusion

To conclude, this article provides in-depth knowledge about the Employee Provident Fund Organisation (EPFO). The organisation has a dual role in implementing EPF with the MP Act. The main advantage of this scheme is to provide pension benefits to the new and existing members of the organisation.