Is EPF More Than Just Retirement Fund? Check Key Benefits For Subscribers
There are many benefits of being an EPF subscriber — from tax-free withdrawals to insurance coverage — that ensure stability and a comfortable retirement.
The Employees’ Provident Fund (EPF) is a widely recognised retirement savings scheme in India. Managed by the Employees’ Provident Fund Organisation (EPFO), it offers financial security to salaried employees. Apart from ensuring long-term savings, EPF also provides many benefits to subscribers. Here are some of the key benefits of being an EPF subscriber:
Retirement Savings With Power Of Compounding
EPF serves as a disciplined savings tool, ensuring employees accumulate a substantial retirement corpus. Both the employee and employer contribute 12% of the employee’s basic salary and dearness allowance towards the fund every month. This amount grows over time with compound interest.
Income Tax Benefits
EPF contributions qualify for tax deductions under Section 80C of the Income Tax Act, 1961, up to a limit of Rs 1.5 lakh per financial year. Further, the interest earned on EPF deposits remains tax-free up to 9.5% per annum. Upon withdrawal after five years of continuous service, the accumulated amount (including employer contributions and interest) is also tax-free.
Partial Withdrawals For Emergencies
EPF subscribers can make partial withdrawals for specific financial needs, including:
Medical emergencies (self or family)
Higher education
Marriage expenses
Home purchase or construction
Repayment of home loan
Lifelong Pension Benefits
A portion of the employer’s EPF contribution goes towards the Employees’ Pension Scheme (EPS), ensuring pension benefits after retirement. Employees who have completed at least 10 years of service become eligible for a monthly pension after the age of 58 years.
Financial Security In Case Of Job Loss
In case of unemployment, an EPF subscriber can withdraw up to 75% of the accumulated EPF balance after one month of job loss. The remaining 25% can be withdrawn if unemployment extends beyond two months.
Monthly Pension Benefits Under EPF
EPF ensures financial security through a monthly pension for employees and their dependents. In the unfortunate event of a subscriber’s early death, the pension extends to their family members. The scheme offers seven types of pensions — superannuation pension, early pension, orphan pension, widow or child pension, nominee pension, dependent parents’ pension and disability pension.
Insurance Cover Under EDLI Scheme
EPF subscribers are automatically covered under the Employees' Deposit Linked Insurance (EDLI) Scheme, which provides a life insurance benefit of up to Rs 7 lakh to the nominee in case of the employee’s death during service.
