There are many ways of saving a substantial amount during the working years so that a person can live the retired life in a comfortable manner. EPF or the Employees Provident Fund is one such scheme which helps people save some amount for their retired life.
What is EPF and PPF?
| Employees Provident Fund (EPF) | Public Provident Fund (PPF) |
| EPF is the main scheme which comes under the Employees Provident Funds and Miscellaneous Provisions Act 1952. | PPF is a popular long term savings cum investment scheme. It gives a combination of safety, tax savings and returns. |
| This scheme is managed under the aegis of Employees Provident Fund Organization (EPFO). It covers every establishment which employs 20 or more employees. | PPF was offered in the year 1968 by National Saving Institute which operates under the Finance Ministry. |
| Under this scheme, the employee pays some contribution towards the scheme and a matching contribution is paid by the employer. The employee then gets a lump sum amount which includes the self and employer’s contribution along with the interest on retirement. | This is used as a corpus for retirement years as the money is put in for a longer duration. It has a 15 year maturity period and offers attractive interest rates and tax benefits too. |
Purpose of EPF and PPF
Both EPF and PPF aim towards empowering the people financially so that they have a corpus amount in their non-earning years so that the same can be invested in running life smoothly in retirement years.
PPF
- To offer a good long term investment option for a period of 15 years.
- To offer a loan which can be availed against PPF scheme between 3rd and 6th financial years.
- To offer attractive interest rates and exemption from taxes.
EPF
- To motivate Private companies and Organizations to take a step towards securing the future of employees.
- To create a corpus amount for the retirement years of an employee who has served the company or the organization during their working years.
- To offer a monthly pension amount to the EPF contributors so that they are able to meet their daily expenses to a certain extent.
Pros and Cons of EPF
Like every public-funded saving scheme, EPF has some clearly demarcated Pros and Cons. The merits, however, outweigh the demerits of the scheme:
| Pros of EPF | Cons of EPF |
| EPF is divided into two parts: provident fund and Employee Pension Scheme. The subscription contribution is 12% of basic daily allowance which goes to the provident fund component. Of the employer’s contribution, 8.33% goes to the Employee Pension Scheme and the rest to provident fund account. | If the members withdraw the amount pre-retirement only, the mounting expenses usually lead to the entire amount being used without any significant gains. |
| On retirement, a person gets the lump sum EPS amount along with the PF. The members of the scheme who complete 58 years and have completed 10 years of service without any withdrawal also get the benefit of the pension component. If a person resigns from the company or the organization they receive PF contribution, Employer contribution and the interest amount. | If the Individual decides to withdraw the Provident Fund balance before they complete the term of five years, the amount becomes taxable. |
Checking status and amount of PPF
The status and amount of PPF can be checked online at any time of the day. The online services only work if the user has created an online account with the bank.
- The user needs to have the existing bank savings/current account linked with the PPF account. Banks allow customers to open PPF account when they have a previous account with the bank.
- To view the details of the PPF account, the users need to log in with internet/ mobile banking credentials.
- Once the user has logged in, they can check the PPF account balance.
- The same can also be checked offline by updating the PPF passbook which has been provided by the bank.
Checking status and amount of EPF
The EPF amount and status can be checked by a number of ways.
- Users can log in to the EPFO portal and use their Universal Account Number (UAN) to access the portal. After adding the UAN number and the password, the users can check the online passbook which has the details of the EPF account.
- EPF number can also be checked by sending an SMS, however, this service can be used only when UAN has been integrated with KYC details. The message EPFOHO UAN ENG has to be sent to 7738299899.
- A missed call can also be given from the registered number to 011-22901406.
- EPF amount and status can also be checked by use of the EPFO app named as ‘m-sewa app of EPFO ”.
Read Also: Public Provident Fund (PPF) – Eligibility, Benefit, Rules and Withdrawal
