Three things to know about Employee Provident Fund (EPF)

Having a solid EPF balance can offer peace of mind as you head towards retirement.

Investment in a pension fund can help deliver a peaceful retirement life. There are several pension funds in the market, but EPF (Employees' Provident Fund) is among the most popular. It is a Central Government scheme that can steadily help you build a pension fund. According to the law, employees of all organizations that employ more than 20 people must be offered an EPF account. This article will give you an in-depth look at EPF and how it can elevate your financial standing.

How does EPF work?
 

EPF works just like any other pension scheme. There is an employer as well as employee contribution to the fund. In addition, in specific scenarios, there can be a government contribution. The employer's contribution to the EPF is part of your CTC.

The money you deposit in EPF also attracts interest. The government decides the EPF interest rate, which is then declared by the EPFO (Employees' Provident Fund Organisation) every year. Currently, provident fund deposits fetch interest of 8.5%.

Also, while there are ways to withdraw your PF amount before maturity, the conditions are strict enough to discourage you from unnecessarily taking a bite out of your retirement investment. This feature makes EPF a good and, most often, the default retirement investment for many individuals.

How to check PF balance?

EPF services are now available online, so you don't need to visit any office. All you need to do is keep the information regarding your PF handy. It includes your EPF number, mobile number to receive OTP, etc.

If you are using online EPF services for the first time, you will need to register on the EPFO website. However, if you are a returning user, you can directly log in to the member's passbook portal on the website. Once logged in, you can see your passbook with all the transactions and closing balance. You can also view employee and employer contribution details and the interest the money has accrued till now.

It is also essential to pay attention to your passbook regularly to see if everything is in place. It is especially true if you have recently shifted companies. Ensure your old PF balance is accurately carried forward to the new passbook. Likewise, if you have made any transactions in the past, track their details in your passbook.

How to withdraw money from a PF account?
 

Withdrawal from EPF before maturity is limited by law. But that doesn't mean it is impossible, especially when there is a dire need. Below are some situations where you can withdraw a part of your EPF balance.

• You can withdraw a part of your EPF if you or anyone in your family suffers from a critical illness.
• You can withdraw your EPF contribution for the construction or renovation of your house.
• You can withdraw from your EPF balance if your house is damaged by natural calamities.

A word of caution
 

A retirement fund is vital for keeping your financials healthy after retirement. Hence, it is wise to avoid withdrawing your PF if there is an alternative.

A personal loan is a good alternative. Banks like IDFC FIRST Bank can offer loans within hours, and the interest offered is also affordable if you have a good credit score.

EPF is a fund for your retirement, so it makes sense to avoid using it before retirement. After putting in the hard yards before 60, happy retirement is the least you deserve. EPF can help you achieve this dream.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.