There was a time when checking your EPF balance or withdrawing the same was a very tedious task. People had to write endless emails, follow up with their employers, Employee Provident Fund Organsation (EPFO) etc. to obtain the information.
The process is now available online and you can check your EPF balance through the following means:
EPF passbook with UAN:
The UAN is a 12-digit number allotted to each Employee Provident Fund member by the EPFO which gives him control of his EPF account and minimizes the role of the employer. UAN number activation started in Oct 2014. You can download the EPF passbook if you have activated your UAN number. Refer our Article on UAN for a step by step process to view the same.
EPF UAN passbook is available at http://www.epfindia.gov.in >> Our Services >> For Employees >> Member Passbook or e-Passbook on right hand side of the home page of EPF.
e-Passbook contains transaction details of an individual’s account
You can also download the e-passbook in .pdf format.
This facility is to view the Member Passbook for the members registered on the Unified Member Portal.
Passbook will be available after 6 Hours of registration at Unified Member Portal.
Changes in the password at Unified Member Portal will be effective at this Portal after 6 Hours.
Passbook will have the entries which have been reconciled at the EPFO field offices.
Passbook facility is not available for the Exempted Establishments Members / Settled Members / In-Operative Members.
Check EPF balance with Umang App
Download Mobile App ‘Umang’ from Google Play store. You can also view your monthly credits through the passbook as well view your details available with EPFO.
Unified Mobile Application is an evolving platform designed for citizens of India to offer them access to the pan India e-Government services from the Central, State, Local Bodies, and Agencies of government on app, web, SMS, and IVR channels. It will integrate almost 200 government services by 2019 across departments, allowing people to work seamlessly with the government.
It is available as a website https://web.umang.gov.in/ and as a mobile App on Android, Windows and iOS platform. Download the Umang app from your respective app store such as Google Play Store for Android users.
Once you have the app follow the below steps to view your EPFO transactions:
EPF Balance by Missed Call
If you have a valid UAN, your mobile number too will be registered with the EPF department. A missed call to 011 229 01 406, at no cost, will ensure that you receive an SMS that lists down your PF number, age and name as per the EPF record. This facility is available only to UAN members. You must register yourself on UAN to avail this service.
EPF balance by SMS:
If your UAN is registered with EPFO, you can get details of your latest contribution and the PF balance by sending an SMS to 7738299899. You need to send this message: EPFOHO UAN ENG. ENG is the first three characters of the preferred language. So, if you want to receive the message in Marathi, then type in EPFOHO UAN MAR.
The facility is available in English, Hindi, Punjabi, Gujarati, Marathi, Kannada, Telugu, Tamil, Malayalam, and Bengali. It has become very easy to check balance of your EPF account. Checking it regularly and reviewing it upto you as an investor.
Risk refers to uncertainty in returns. Debt instruments are considered less riskier than Equities because there is a lesser uncertainty in the returns one can expect from Debt Instruments. Never the less, following are the major risks are involved in investing in Debt Securities.
Fixed income securities such as bonds, debentures and money market instruments face interest-rate risk. Generally, when interest rates rise, prices of existing fixed income securities fall and when interest rates drop, prices of fixed income securities increase.
For example: If a Rs. 100 par value security offers 9% rate of return, and the prevailing rate of interest increases from 9% to 10%, the values of the security will fall below Rs. 100 because it offers a lower rate of return(9%) compared to the market return(10%). The extent of fall or rise in the prices depends on the existing coupon rate, time to maturity of the security and the quantum of increase or decrease in the interest rates.
In simple terms this means that the issuer of a debenture/bond or a money market instrument may default on interest payment or in paying back the principal amount on maturity. Even if no default occurs, the price of the security may go down if the credit rating of the issuer of the debt instrument goes down.
Investment in Government securities has zero Credit Risk as the Government is not expected to default on its obligations.
This refers to the ease with which a security can be sold at or near to its market value. Liquidity risk can be measured by the difference between the buy price (bid price) and the sell price (offer price) quoted by a dealer. Larger the difference, greater is the Liquidity Risk. Indian Debt market has a higher Liquidity risk compared to Global Debt market, because of low trading volumes in the Indian Debt market.
If interest rates fall, the coupon payments being received on fixed income securities will have to be re-invested at the lower prevailing interest rate. This is known as Reinvestment Risk.
For example: If you are receiving 9% coupon on a fixed income security, and the prevailing interest rates are 7.5%, the coupon payment received will have to be invested at the lower rate of 7.5%.
As zero coupon securities do not provide any periodic interest payments they do not have Reinvestment risk. However, they have a higher interest rate risk.
“Every month I save my salary into EPF and it is a great form of investment” I have heard this way too many times. When I asked them if they knew what EPF is and how is EPF a great investment? Not many people were able to answer this question.
People just know that 12% of their salary goes into an EPF account and it is a great form of investment and savings. EPF being a primary investment for salaried individuals, you must know everything about it. Hence, we have written a detailed article about everything that you would want to and must know about your EPF investments.
What is EPF?
EPF is retirement benefit scheme that is generally available to all salaried employees and forms an important tool for financial planning.
Basically, EPF is like a guaranteed investment as the amount is deducted from your salary before the same is paid to you and invested. You might skip on your SIP or Insurance premium, but your EPF will be deducted from your salary each month.
Under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, EPF has two components namely Employees’ Provident Fund Scheme 1952 and Employees’ Pension Scheme 1995 (EPS). These are two different retirement saving schemes under which any salaried individual is covered if he/she is drawing more than INR 6,500 per month as basic salary.
There are 2 contributions into the EPF.
Contribution to EPF & EPS
There are a few components of EPF such as below.
|Scheme||Employee’s Contribution of basic pay (+ DA if any)||Employer’s Contribution of basic pay|
|EPF||12% of basic pay||3.67% (where salary is upto INR 15,000)|
|12% of basic pay less 1250 towards EPS (where salary is more than INR 15,000)|
|EPS||Nil||8.33% of basic (where salary is upto INR 15,000|
|INR 1250 per month (where salary is more than INR 15,000)|
|EDLIS||Nil||0.5% (capped at maximum of INR 15,000)|
EPF – Employee Provident Fund
EPS – Employee Pension Scheme
(Refer our Article on EPS )
EDLIS – Employees Deposit Linked Insurance Scheme
(Refer our Article on EDLIS )
The employer contribution is exempt from tax up to 12% contribution while employee’s contribution is eligible for tax benefit under Section 80 C of the Income-Tax Act, 1961. EPF is under the EEE norm currently indicating that the money invested, interest earned and the money withdrawn after a specified period (5 years) are all exempted from income tax in the hands of the employee.
EPF provides you with nomination facility whereby mother, father, spouse or children can be nominated for receiving the proceeds at the time of death of an employee. Government, currently, doesn’t allow nominating siblings.
Transfer and withdrawal policy
An employee start receiving pension from EPS amount after completion of minimum 10 years of service and attaining the age of 58 or 50 years. The pension amount is payable to the subscriber until he is alive and in the event of death of the employee, members of his family -whoever is nominated is entitled for the pension. Monthly pension is determined based on ‘pensionable service’ and ‘pensionable salary’ for which the following formula is generally used:
Monthly pension = (Pensionable salary X Pensionable service) ÷ 70
It is worth noting here that the pensionable salary is nothing but your basic salary on which you have paid EPS premium. Thus, monthly pension will have received will be nowhere closer to real CTC.
Top-up on EPF (Voluntary Provident Fund)
Yes, you can always invest more than 12% of regular contribution. However, any amount over and above EPF is termed as Voluntary Provident Fund or the VPF. In this case the excess amount is invested in EPF and is eligible interest benefit.
UAN services and other recent developments
UAN is a unique number assigned to an employee and it indicates that the subscriber is availing Employees’ Provident Fund Organization (EPFO) service. EPFO generally manages the money in your EPF account.
UAN number is fixed throughout the lifetime and has portable flexibility. Thus, when an employee changes job his new EPF account which will have different account number and will be opened by new employer can be linked directly to UAN. Thus, UAN acts as an umbrella of multiple EPF IDs allotted to an employee by different firms.
EPFO, in a recent development, introduced the facility of linking Aadhar (unique id) to UAN. This would help the member avail facility in a better and seamless manner. The facility is available at the official website http://www.epfindia.gov.in under Online Services section.
Benefits of Linking UAN With Aadhaar
Refer our Article to understand the interest calculation on EPF and the amount due to you over a period of time.
EPF contribution is definitely one of the best investments for retirement. It is risk free, tax free, long term debt investment which gives approximately a return of 9.7% post taxes and helps salaried people to build on a corpus for retirement or any other financial need over the long term.
NEVER PUT ALL YOUR EGGS IN A SINGLE BASKET!II A. DEBT INSTRUMENTS (1) PO Monthly Income Scheme(MIS): A deposit offered by the Post Offices(PO) which pays a monthly interest. Suited for retired individuals. (2) PO Recurring Deposit(RD): Another scheme from the Post Office which enables small periodic savings with as low as Rs. 10 a month. (3) Kisan Vikas Patra(KVP): Popular fixed income bonds which repay the principal and interest on maturity. (4) National Savings Certificate(NSC): Popular fixed income bonds which repay the principal and interest on maturity. (5) Bank Fixed Deposits: The most popular investment avenue in India. The deposits could bear a Fixed Rate or a Floating Rate of interest. Banks also offer Recurring Deposits. (6) Mutual Funds: Debt Mutual Funds score over deposits because of they are more tax efficient and more liquid. These include Income Funds, Monthly Income Plans and Liquid Funds. (7) Corporate Deposits: Apart from banks an investor can invest in deposits ofCorporates, NBFCs and other Financial institutions. These generally offer a higher rate of interest compared to bank deposits and have a higher risk. II B. Retirement Saving Avenues: (1) Senior Citizen Savings Scheme(SCSS): A government of India Scheme specially for retired individuals. (2) Public Provident Fund(PPF): The most popular tax saving scheme falling under the ‘EEE’ category of investments. (3) Employees Provident Fund(EPF): Mandatory contributions to the EPF required by law for all salaried employees result in this fund forming a part of every individuals’ portfolio. (4) New Pension Fund(NPS): Another ‘EEE’ category product, which helps one accumulate a corpus for his retirement days. (5) Annuities: The corpus accumulated for one’s retirement can be invested to earn monthly annuities to meet post retirement expenses. (6) Reverse Mortgage: A product recently introduced in India, it offers retired individuals monthly income against the security/mortgage of their house. II C. Government Bonds There are a number of securities issued by the Government of India available for investment based on their requirement: (1) RBI Bonds (2) State Government Bonds (3) NHAI/REC Bonds u/s 54EC for Capital Gains (4) NABARD Bonds u/s 80C (5) IIFCL Tax Free Bonds (6) 8% taxable Savings Bonds III. STRUCTURED PRODUCTS (1) Capital Protection with market participation Products: Generally restricted to the High Networth Individuals(HNIs), structured products come in different shapes and sizes. (2) Private Equity(PE) Funds: For the niche section of investors, these investments fall in the high risk high return category. IV. REAL ESTATE (1) Direct Investment: This involves buying physical residential and commercial properties including land. (2) Real Estate Funds: Just like Mutual Funds, real estate funds pool in the investors money and invest in real estate properties. This scores over direct investment because of lower transaction costs and professional management of the fund. (3) Real Estate Investment Trusts(REITs): A security that sells like a stock on the stock exchange and invests in real estate directly, either through properties or mortgages. Such securities are not yet available in India. V. COMMODITIES (1) Gold ETFs: The most popular and easiest route to gain exposure to investments in gold. (2) Direct Investments: Just like the direct equity route, one can get exposure to commodities both in the cash or Futures & Options market. VI. FOREX The largest market in the world in terms of volume, this is an investment product which is not yet popular among the retail investors in India.
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