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The most important tool in the retirement planning arsenal is the Employee Provident Fund. When you stick with it long-term, you can not only meet retirement goals but exceed them because:

1. Has 100% tax-free interest
2. Works of interest on compound growth

Both of these factors ensure that at maturity, PF provides substantial savings. Illustrated below are all the advantages an EPF offers a person and their loved ones in times of need, emergency or after retirement.

What are the merits of the Provident Fund?

• Sure

The insurance plan linked to employee deposits establishes that a company must contribute 0.5% of the basic monthly salary as a premium for the insurance coverage. EDLI is applicable when the organization does not offer its employees a group insurance plan. The employer contribution is capped at Rs 6,500. In addition, the amount of insurance coverage is the greater of the following two:

1. Twenty times the average salary of the last year (up to Rs 6,500 per month), which works out to be Rs 130,000.
2. The total amount in the PF account (up to Rs 50,000) plus 40% of the balance amount.

For workers in small businesses, the sum that EDLI produces is sometimes more than enough to survive.

• Pension

EPF composed of two elements:

1. provident fund
2. Employee pension scheme

The latter was introduced in 1995. While the employee’s contribution, which is 12% of the base salary plus DA, goes entirely to PF, the employer’s contribution is divided. Of the 12% that the company has to give, 8.33% is deposited in the EPS. This is capped at Rs.541. The balance amount is added to the PF.

When a person retires, they receive a pension that depends on:

1. The average salary they had in the year before retirement.
2. The number of years they have worked.

What this means is that the contribution to the EPS, over the years, builds a substantial corpus as a pension. Due to a provision of the law, the EPS can be received together with the PF in a lump sum. To collect a pension you must:

1. Being 58 years old or older
2. Completed a decade of service with no retirements from it

In case an employee retires before reaching the age of fifty-eight, he can still collect the pension only for a reduced amount. In addition, in the event of the death of a worker, the family is entitled to a pension as long as the established conditions are met.

It should be noted that there is a limit to the maximum amount of pension for each month: Rs 3,500. There is a simple technique to circumvent this limit if the employer uses the worker’s actual salary for the contribution instead of the specified Rs 6,500 per month.

• Unique Situations

One of the main supports a person gets through PF online registration is a financial cushion during difficult or extraordinary times. When an emergency arises and there are no funds saved or help available, the EPF can be withdrawn. To dive into the corpus, some conditions must be met and a specific boundary must be crossed. Some examples of when EPD can be useful are:

• A medical emergency:

For any major surgical operation or conditions such as cancer, tuberculosis, leprosy, heart disease, mental problems, and paralysis, a person can withdraw money from the EPS. The amount that can be taken must be less than the following two:

1. 6 times the person’s salary
2. Total contribution made to the EPF to date

The withdrawn fund can be used for the treatment of the spouse, children, oneself or dependent parents.

• any life goal

A parent plans the education and marriage of a child, a person might want to give his brother a higher education, or a person might want to study more. These are all life goals that can receive financial help through EPF. An employee can withdraw approximately half of the contribution for the marriage or education of a child, himself or a sibling.

This can be done up to three times in its lifespan. The only criteria that must be met are:

1. Valid document proving marriage or fee payable to the university
2. He spent seven years in the service

• dream house

When an employee wants to build a new house, repair or maintain an old one, they can use the money in EPF. It may also be appropriate for the payment of mortgage loans. The association specifies the contingencies that must be fulfilled for it. The usual few are:

1. For the payment of the housing loan, three years’ salaries from the EPF can be used provided that 10 years of service have been completed.
2. For home repair or modification, twelve months’ worth of wages can be withdrawn. This requires an existing house and can only be done once. For alteration, the person has to complete 5 years of service and for repair 10 years.
3. To buy a new house, an employee only needs to work for five years. The amount withdrawn can be used to buy a new house or land and the construction of a new home. If a piece of land is purchased, the total that can be withdrawn is 24 months of salary. For a house, the amount can be 36 months of salary. This amount can be collected only once in a lifetime. The house or lot can be in the name of the employees, in the name of the spouse or jointly owned.

The advantages of EPF are not limited to those explained above. There are some other circumstances where it can be used, such as:

1. Natural calamity damage
2. Purchase of equipment for physically handicapped
3. If the person changes jobs and remains without a profession for more than two months

Nominating a family member to receive the EPF corpus in the event of the employee’s death is an excellent safety net.