Tagged: Provident Fund

ATM :: How to withdraw 90% of your provident fund to buy a house

May 12, 2017 | 11:39 IST | SOURCE : Economic Times | Retrieved from Timesnow.tv


In an effort to make its ‘Housing for all by 2022’ a success, the government has allowed for EPFO members to withdraw up to 90 percent of their provident fund (PF) accumulations to make down payments to purchase a house and to pay housing loan EMIs.

Pre-requisites for PF withdrawal

In order to dip into the provident fund saving, the new rule highlights that the PF holder will only be eligible if he/she has been a contributing PF member for at least 3 years, and is buying property in a registered housing society that has at least 10 members.

Further, the property has to be purchased in the member’s name and cannot be purchased jointly with anybody else, except your spouse.

How the money can be used

The money withdrawn can only be used for an outright purchase, as a down payment for a home loan, for buying plots or for the construction of a house. The transactions can be made through central government, state government and even from a private builder, including promoters or developers.

Can the money be used to buy resale flats as well?

Unfortunately no, EPFO will only make payments directly to a co­operative society, the state government, central government, or any housing agency under any housing scheme, or any promoter or builder, in one or more installments. The rule will not apply to real estate purchases in the secondary market or resale transactions.

Can you withdraw both employee and employer contribution?

An EPFO member can withdraw his own share of PF contribution plus interest as well as the employer’s share of contribution plus interest.

Can you EMI payment through PF?

A PF member can use his PF contribution to pay full or part EMIs for a home loan taken in the member’s name. The EMI will be directly paid by EPFO to the government, housing agency or the bank.

How to apply

A PF member can apply individually or jointly through a housing society to get a certificate from the EPFO.

Through Annexure I form, an employee can ask for the balance and the deposits made in the last three months before applying. This will help the EPFO determine how much EMI can be arrived at.

Also, the employee has to mention the name and details of the bank or housing society to whom such certificate is to be issued.


The EPFO then issues a certificate showing the outstanding balance and last three month’s deposit in the account. Alternatively, members can take printouts of their PF passbook downloaded from the EPFO website and submit it to housing agencies or banks.


If a member wishes to use PF money to meet EMI’s, then in addition to Annexure I, an authorisation by the member is to be filled in a prescribed format. It will carry details such as PF amount, PF and loan account number, lender name, address etc. One has to get this form authorised from the lender i.e. branch manager of the lender who has sanctioned the loan. Once approved, EPFO will start transferring EMI’s online to the lender’s account.


What if an employee leaves his/her job?

The EPFO has made it clear that under no circumstances would it be liable for any default of payments to the lender. The EPFO will not be party to any agreement made between an EPFO member and a society or builder.

In case a member quits his job, the responsibility of repaying the loan would rest with the employee and not the EPFO.


While dipping into your PF account to make a down payment makes your life easier, it is important to remember, your PF is meant to take care of your post­ retirement needs, and depleting it may jeopardise your retirement.

So make sure you have a backup plan to meet post­retirement needs through equity mutual funds or PPF.

Source: https://goo.gl/egUXjH

NTH :: PF interest rate hiked to 8.8% for 2015-16 from existing 8.75%: Bandaru Dattatreya

The government on Tuesday increased interest rates on provident fund (PF) to 8.8 per cent for the ongoing financial year ended March 2016 from 8.75 per cent earlier.
By: FE Online | New Delhi | February 17, 2016 10:16 AM | FinancialExpress.com


EPFO provides the rate of interest from its earnings on investment on formal sector workers’ fund without any assistance from the government. (AP)

The government on Tuesday increased interest rates on provident fund (PF) to 8.8 per cent for the ongoing financial year ended March 2016 from 8.75 per cent earlier.

EPFO has been paying 8.75 per cent interest rate for the last two fiscals to its 5 crore organised sector subscribers.

“PF interest rate is hiked to 8.8 per cent for 2015-16 from existing 8.75 per cent,” said Labour Minister Bandaru Dattatreya on Tuesday. “We had last time given 8.75 per cent and this time, seeing the situation, we are declaring 8.8 per cent for the workers,” he told reporters after chairing the 211th meeting of the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO).

The trade unions had demanded that the interest rate be fixed at 8.90 per cent, the government had revised it to 8.80 per cent, he said, underlining the Centre’s commitment to the working class.

EPFO provides the rate of interest from its earnings on investment on formal sector workers’ fund without any assistance from the government. The income projection of the retirement fund body is upwards of Rs 34,844 crore for the current fiscal. At this, EPFO would not have any problem to raise the rates to even 9% considering that it would still have Rs 100-odd crore surplus.

Source : http://goo.gl/M5GRI6

NTH :: PF may be withdrawn online from August

PTI|11 Feb, 2016, 04.19PM IST | Economic Times


NEW DELHI: Retirement fund body EPFO may launch by August an online facility to withdraw provident fund, a move that will reduce paperwork and provide hassle-free service to its subscribers.

With the new facility, settling PF withdrawal claims would just take few hours.

“We are hopeful of launching an online facility for PF withdrawal claims by August this year. We have already digitised our records and processes using Oracle operating system,” a senior EPFO official told PTI.

“EPFO will soon buy blade servers for setting up three Central Data Centres at Gurgaon, Dwarka (Delhi) and Secunderabad. All the three centres will be connected to 123 offices of the Employees’ Provident Fund Organisation (EPFO),” he said.

The process of procuring servers would be completed by May while the testing would start in June to gauge the response of the system in place.

“After intensive testing and trials in June and July, we are planning to launch the online PF withdrawal facility in August this year,” the official said.

Once this is operational, subscribers can apply online for PF withdrawal, which will be transferred directly to their bank accounts.

At present, subscribers who wish to settle their accounts with the EPFO are required to apply manually.

For settling online claims, the subscribers would have to activate their Universal (portable PF) Account Numbers which are seeded with KYC details including bank accounts, Aadhaar number and permanent account number.

The EPFO has over five crore subscribers.

As many as 6.15 crore UANs were issued by EPFO out of which 2.34 crore have been activated by the subscribers so far.

Source : http://goo.gl/Nf7HsB

NTH :: Interest rates on small savings schemes like PPF may be reset every quarter

By Deepshikha Sikarwar, ET Bureau | 23 Jan, 2016, 10.31AM IST | Economic Times


NEW DELHI: Interest rates on popular small savings schemes such as Public Provident Fund (PPF), National Savings Certificate (NSC) and the Kisan Vikas Patra could soon be reset every quarter as part of the government’s plan to peg them closer to market rates to reduce market distortions and help the cause of lower interest rates.

The government will also reduce the mark-up over the benchmark government bond rate for such schemes of small maturities to nudge short term rates lower.

High interest rates on small savings schemes have long been cited as a structural barrier to interest rates coming down as they compete with bank deposits, but are not subject to the same kind of market pressures as them. Because they stay high, bank deposit rates are forced to remain high and therefore prevent lending rates from coming down.

A senior government official said the first reset under the new rules will happen from April 1 this year and rates are expected to fall. A notification will be issued soon, this official said, adding that interest rates on schemes for senior citizens and a scheme for girl children were not likely to be revised.

Small savings’ interest rates are linked to yields on government bonds of comparable tenure, but unlike gilts that are traded daily and see yields change, these change only sparingly.. The last revision in rates on these schemes was on April 1last year. Since then, market rates have moved south following a 0.75 percentage point policy rate cut by the Reserve Bank of India, creating a wide wedge between what the banks can offer and what is available on small savings.

State Bank of India, for example, offers 7 per cent on deposits of maturity of five years or more. Deposits of such tenure fetch 8.5 per cent in a post office small savings account. The PPF rate for a similar maturity is 8.7 per cent. This wide gap between small savings’ and market rates impacts deposit mobilisation by banks as their ability to reduce deposit rates is adversely impacted. This impacts banks’ ability to lower lending rates as well.

A quarterly reset of small savings rate will ensure that distortion in the rates caused by the small savings is kept to a minimum, officials said. The weighted average yield of dated government securities was 7.9 per cent in April-September 2015 compared with 8.81 per cent in the first half of the preceding year, potentially opening up the possibility of an up to one percentage point reduction in the small savings rate.

In their pre-budget meeting with Finance Minister Arun Jaitley earlier this month, banks and financial institutions had also suggested quarterly benchmarking of rates.

Source : http://goo.gl/LBLfSt

NTH :: Here’s how your provident fund may earn higher interest rate this fiscal

Interest rates of provident fund might increase to 8.95% from 8.75% earlier
DNA WEB TEAM | Fri, 22 Jan 2016-09:47am , Mumbai , dna web desk


The interest rates of provident fund might increase to 8.95% from 8.75% earlier. The Employees Provident Fund Organisation’s (EPFO) finance panel has recommended the increase in interest rates on statutory savings of over 5 crore subscribers to 8.95% in the current fiscal, according to a leading news agency.

The central board of trustees have endorsed the proposal and is yet to get the finance ministry nod. If the proposal is approved then it will be the highest return since 2011 when the interest rates were 9.5% and the highest ever real interest rate, said the report.

The 8.95% interest rate will translate into returns of nearly 12% for the highest slab as withdrawals and interest earnings do not attract tax at the time of withdrawal.

The government and the Reserve Bank of India (RBI) are looking at reducing deposit rates in order for banks to cut lending rates and push investment. The move to increase the interest rates on EPF deposits may result in a diversion of bank discounts or other small saving schemes.

The finance ministry is expected to lower the interest rates on many small savings schemes by up to 50 basis points.

The EPFO’s, which is a basic investment for many employees, increase in interest rates might face some resistance from the finance ministry. However, it might go through as the middle class depends on it for savings.

Source: http://goo.gl/IIbZf7

NTH :: EPFO Insurance Scheme – Hassle free: Nominee entitled for benefits, irrespective of cause of death

Here’s all that you should know about the employee deposit linked insurance scheme.
Written by Adhil Shetty | Published:Dec 11, 2015, 2:00 | Indian Express


Not many investors know that the retirement benefits administration body Employees’ Provident Fund Organisation (EPFO) offers an insurance scheme covering all employees working with organisations as part of the EPF.

Along with the Employee Provident Fund and the Employee Pension Scheme, the Employee Deposit Linked Insurance (EDLI) forms the troika of the social security schemes administered by the Employees Provident Fund Organisation.

Here’s all that you should know about the employee deposit linked insurance scheme.

What is Employee Deposit Linked Insurance?
Employee Deposit Linked Insurance is a term insurance plan offered by the EPFO. The scheme offers life coverage for all employees working with the organised sectors and enrolled in EPF. The scheme is administered by the Employees Provident Fund Organisation and is applicable to all companies who are part of the EPF.

The EDLI scheme works just like a group term insurance plan where if an employee dies during the service period, his family or nominee gets the sum assured up to a certain maximum limit as defined by the rules of the EDLI scheme.

Protection coverage under the EDLI scheme
Being a group term insurance plan, EDLI offers a 24-hour-protection to the employees as part of the scheme. This means the insured does not need to be at their workplace for the scheme to be valid or applicable. The scheme protects them 24×7 irrespective of whether they are at work or not.

The coverage and premium charges under the EDLI scheme are the same for every employee irrespective of any factor including age or gender.

Employees contribute 0.5 per cent of their monthly basic pay and dearness allowance (capped at a maximum of Rs 15,000) as premium for this, and the coverage is linked to the premium.

The family or nominee of the policyholder (employee) under the EDLI scheme will get benefits irrespective of the cause of death including illness, accident, or natural causes.

EDLI earlier had stipulated 12 months of service with the same employer as a mandatory condition for being protected under the insurance scheme. Now, there is no such minimum limit of service and employees are covered under the EDLI scheme as soon as they start working with a company.

Extent of claim available
As per the recently issued EPFO guidelines, the maximum claim amount is capped at 30 times of the last drawn salary of the policy holder. Along with the claim amount, EPFO also offers a bonus of Rs1.5 lakh for each claim.

So the maximum claim amount you can avail under the EDLI scheme is therefore calculated as 30 times Rs 15,000 plus the Rs 1.5 lakh bonus, which comes to Rs 6 lakh. The previous limit was Rs 3.6 lakh only.

How to file for a claim
Before you opt for a claim under the EDLI scheme, make sure that you have all the required documentation in place. You will need:
* Death certificate of the employee as issued by the local municipal corporation.
* Legal heir certification or succession certificate.
* If the employee was working with a company exempted under the EPF Scheme 1952, the employer will need to submit the PF details of last 12 months.
* Once you have all the documents in place, you will need to submit the EDLI claim form. The form is available at: http://www.epfindia.gov.in/site_docs/PDFs/Downloads_PDFs/Form5IF.pdf

You should also submit Form 20 and Form 10D / 10C to claim provident fund dues. Before submitting the claim form, you will need to get it attested by the employer.

Source : http://goo.gl/H6OSfl

NTH :: After EPFO, smaller pension funds set to invest in stocks

TNN | Sep 3, 2015, 06.25AM IST | Times of India


The government, with an objective of creating a credible counterbalance to foreign funds in the stock market, is getting several smaller pension funds controlled by it to follow the Employees’ Provident Fund Organisation (EPFO) to invest part of their corpus in the stock market. Last month, for the first time in its 64-year history , EPFO, which manages over Rs 8.5 lakh crore worth of funds for salaried employees, started investing 5% of its incremental inflows (about Rs 400 crore per month) in stocks.

“Coal Miners Pension Fund, Seamen’s Provident Fund Organisation, Assam Tea Planters’ Fund, Jammu & Kashmir employees’ pension fund and several other such funds are now talking to Sebi for investing in stocks,” a senior Sebi official said.”The overall strategy for the government, to get domestic pension funds to invest in the equity market, is to have in place an institutional money pool which could be a counterbalance to FPIs,” the Sebi official said. FPIs, or foreign portfolio investors, mainly constitute foreign institutional investors (FIIs) and also include foreign individual investors and other investors of non-Indian origin.

Such a strategy to create a large pool of domestic institutional investors is necessitated by the fact that often, because of domestic or global factors that could be fundamental or technical in nature, foreign funds start buying or selling in the Indian market. This, in turn, leads to substantial volatility in the Indian market. To check such abrupt and sharp volatility , the government wants to have in place a large pool of long-term domestic institutional money , the Sebi official said.

As of now, mutual funds have around Rs 3 lakh crore in equities while another Rs 5 lakh crore is with insurance companies and other institutions. The combined equity investment figure of these domestic institutions nearly equals the total equity holdings of FPIs. Yet, selling by FPIs leaves a major impact on the stock market because they can take money out of India while domestic institutions cannot. The government wants a cushion that is able to balance out selling by FPIs even on a major scale.

Last month, EPFO started investing in the stock market through two of SBI Mutual Fund’s exchange-traded funds (ETFs), one each on nifty and sensex indices. To tap the long-term pension money from these PF funds, mutual fund houses are also launching ETFs, with UTIMF being the latest to open a sensex and a nifty ETF. LICMF and IDBI Bank have also filed their documents with Sebi.

Although EPFO has the leeway to invest up to 15% of its incremental corpus in stocks, it has started with 5%.Fund industry players said that other smaller PFs, which are also talking to Sebi to start investing in the stock market, will not take any extra risks in such investments and follow the EPFO model and stick to 5% now.

Source : http://goo.gl/ZZjpjs