THE EMPLOYEES‟ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952

What is meant by EPF? 

The EPF is a scheme intended to help employees from both private and non-pensionable public sectors save a fraction of their salary every month in a saving scheme, to be used in an event that the employee is temporarily or no   longer   fit   to   work   or   at   retirement. Since this scheme is mandatory for all employers, most employees benefit out of this scheme.

Write a note on the object of the EPF and Miscellaneous Provisions Act, 1952.

Objects 

• The object of the EPF and Miscellaneous Provisions Act, 1952 it to provide for the institution of provident funds and family pension and deposit-linked insurance schemes for employees in factories and other
• The acts were brought into force from November,
• Initially the Act applied to industries engaged in the manufacture of cement, cigarettes, electrical, mechanical or general engineering products, iron and steel, paper and textiles.

What are the salient features of EPF Act? 

The Employees’ Provident Fund was instituted by an Act of Parliament in 1952 for providing the social security benefits to the work force engaged in non-government sector. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the Schemes framed there under have been structured as self-applying and the employers of the establishments are responsible to report compliance of their own. The three schemes framed are given below:

1.      Employees‟ Provident Funds Scheme, 1952

2. Employees‟ Deposit-Linked Insurance Scheme, 1976 (EDLI) and

3.      Employees‟ Pension Scheme, 1995 (EPS) (Earlier the Employees‟ Family Pension Scheme, 1971)

The primary object of these three schemes is to provide social security and to inculcate amongst the workers a spirit of savings while they are gainfully employed and to make provision for their benefit after they retire from service and for their family members after their death.

The Employees Provident Funds Scheme, 1952 was introduced in November 1952 to provide old-age and post service financial support to the workers in general employed in Industrial & Commercial Sector establishments. The scheme provided for provident fund system on contributory basis by the Employers and the Employees at equal rate. It made available to the employee concerned the accretions in the Provident Fund a/c with interest in lump sum on retirement or leaving the job.

Contribution of Employee 12% of the Pay

―Pay‖ includes basic wages with dearness allowance, retaining allowance (if any), cash value of food concession, and also on Leave Encashment

Basic Wages means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-

• the cash value of any food concession;

• any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, over-time allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
• Any presents made by the employer

Retaining allowance means allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working, for retaining his service

VOLUNTARY CONTRIBUTION: –

 Member shall be at liberty to make voluntary contribution

Employer’s Contributions

Equal to 12% of the Pay of employee

 Type of Advance from PF accumulations

1. Purchase dwelling(house) site
2. Construction of a dwelling house
3. Completing construction of the house
4. Buy a dwelling house /Flat from Agency
5. Purchasing a newly constructed/old dwelling house or flat from an individual
6. Purchasing house/flat from a promoter
7. Additional Loan -alterations/improvements
8. Further housing withdrawal
9. Repayment housing loan
10. Withdrawal on 54 Years or within 1 year before actual retirement
11. Closure or lockout/non-receipt of wages for a continuous period of 2 months etc.
12. Further advance in case of closure or lock-out of establishment/ factory for more than 6 months
13. Advance for illness of member and his family
14. For marriage, or post matriculation education
15. Property damaged by a nature calamity
16. If Members affected by cut in the supply of electricity
17. Member physically handicapped

Nomination

1. An employee may be allowed to make a nomination conferring on one or more persons the right to receive the provident fund amount
2. If an employee nominates more than one person, he shall, in his nomination specify the amount or share payable to each of the
3. Where an employee has a family at the time of making a nomination, the nomination shall be in favour of one or more persons belonging to his family
4. Any nomination made by an employee in favour of a person not belonging to his family shall be
5. If at the time of making a nomination the employee has no family, the nomination may be in favor of any person or persons
6. A nomination made by an employee may, at any time, be modified by filing Form 2
7. Where the nomination is wholly or partly in favor of a minor, the Member may, appoint a major person of his Family to be the guardian of the minor nominee Provided that where there is no major person in the Family, the Member may, at his discretion, appoint any other person to be a guardian of the minor

―Family means: –

For Provident Fund (PF): –

• in the case of a male member, his wife, his children, whether married or unmarried, his dependent parents and his deceased son‘s widow and children;
• In the case of a female member, her husband, her children, whether married or unmarried, her dependent parents, her husband‘s, dependent parents, her deceased sons‘s widow and children;

For Pension Fund (EPS):

• Wife in the case of male member of the Employees‘ Pension Fund;
• Husband in the case of a female member of the Employees‘ Pension fund; and
• Sons and daughters includes child legally adopted by the member below 25 years of age Withdrawal from the fund

Member is entitled to withdraw full amount: –

• On retirement from service.
• On retirement on account of permanent and total incapacity for work due to bodily or mental infirmity.
• Immediately before migration from India for permanent settlement abroad or for taking employment abroad
•  On termination of service in the case of mass or individual retrenchment
• On termination of service under a voluntary scheme of retirement

After two months of resignation. In case of no employment 

What do you understand by EDLI Scheme.

Employees‟ Deposit Linked Insurance Scheme, 1976 (EDLI)

The Employees‘ Deposit Linked Insurance Scheme, 1976 provides for payment of assurance benefit, upon death of the member while in service; linked to the average balance in the provident fund account of the deceased member. The assurance benefit shall be payable to the person entitled to receive provident fund accumulation of the deceased member.

Membership – All members of Provident Fund

Contribution

Employees are not required to contribute

Employer is required to contribute @ 0.50% of Pensionable Salary

Ø  Benefits:

On the death while in service of the member, the nominee of the deceased shall in addition to PF/EPS accumulation, be paid an amount equal to the average balance in the PF accumulation of the deceased for the preceding twelve months and if the average balance exceeds Rs. 35000/- then the amount payable shall be Rs. 35000/- plus 25% in excess of Rs. 35000/- subject to a maximum of Rs. 60, 000/-

 

Write a short note on EPS.

Employees‟ Pension Scheme, 1995(EPS)
Introduction: In force from 16.11.1995 retrospectively with effect from 1.4.1993
Employees‘ Pension Scheme is a survivor, old age and disability pension scheme.
Contribution: v  Employee is not required to contribute separately under the Employees‘ Pension Scheme 1995. v  Employer share of Provident Fund Contribution @ 8.33% is diverted to Pension Fund
Type of Pension:
Monthly Member‘s Pension	On attaining the age of 58 years
Invalidity pension	Permanent and total disablement during the course of employment
Widow pension	Death of member whether in service or after exit from employment or after retirement/ commencement of monthly member pension. Pension for life or until remarriage
Children pension	Payable to two children of deceased member up to the age of 25 years in addition to widow.
Orphan pension	Two orphan children up to the age of 25 years
Nominee pension	In case of unmarried members, a person nominated by the member will get pension equal to widow pension.
The Scheme covers members death risk unconditionally – i.e. irrespective of whether such death occurs While in service; away from employment and not contributing to the fund ;or after retirement as a pensioner   The family members shall remain entitled for pensioner support uniformly

 

Pension benefits to Member:
v  For Service below 10 years:
Return of contribution on exit from employment as per Table D
Less than 6 months – NIL
TABLE D
Year of service	Proportion of wages at exit
1	1.02
2	2.05
3	3.10
4	4.18
5	5.28
6	6.40
7	7.54
8	8.70
9	9.88
v  Service above 10 years but below 20 years
A person is entitled for pension after completing the age of 58 years with minimum service of 10 years
Six months or more shall be treated as one year and the service of less than six months shall be ignored.
Pension will be calculated by applying the formula:
Pensionable Salary x Pensionable Service —————————————————- /70
v  Service over 20 years:
Full pension according to the formula stated above

On rendering 20 years of Pensionable service or more, member‘s Pensionable service shall in all cases be increased by 2 years

v  Commutation of Pension

Ø  Option is available for commutation of Pension

Ø  Commutation is permissible upto 1/3rd of pension amount

Ø  Commuted value will be hundred times of pension amount so commuted

Ø  Upon commutation, the balance amount of pension payable shall be the monthly pension

v  Early Pension of Cessation of Employment

Old age pension on account of superannuation/retirement is normally payable on attaining the age of 58 years. However, member can opt for taking earlier than 58 years on his exit from employment but under no circumstances pension will be payable before the age of 50 years. A member who desires to draw monthly pension from a date earlier than 58 years of age will be allowed to draw a monthly-reduced pension. The amount of pension in such a case shall be reduced at the rate of 3% for every year the age falls short of 58 years.

v  Payment of Pension Through Bank:

The pension is disbursed though Nationalised Bank of the respective State. The member/pensioner are required to open an account in the Bank where pension is desired and indicate the option in the application in Form 10-D

v  Scheme Certificate

There are occasions when a member may leave employment and or may move from a covered establishment to an uncovered establishment before he reaches the date of superannuation, he may opt for a Scheme Certificate. The certificate will indicate his Pensionable salary and the amount of pension due on the date of exit from employment. If the member is subsequently employed in a covered establishment, his Pensionable service in the scheme certificate will be taken into account for working out his full Pensionable service.

v  Withdrawal Benefit:

If the member renders less than 10 years Pensionable service on the date of exit or on attaining the age of 58 years, whichever is earlier, he is entitled for withdrawal benefits as per Table ‗D‘ or he may opt for scheme certificate.

 

 

Discuss the benefits of Employee Pension Scheme, 1995.

 

Newly introduced Employees’ Pension Scheme-95 provides for following benefit package:

 

1. Pension for life to the member, on superannuation/retirement and invalidation.

 

2. To the members of the family upon death of the member:

 

1. Pension to Widow/Widower for life or till re-marriage.

 

1. To children/orphan, two at a time additionally up to

 

1. 25 years of age simultaneously with widow/widower

 

1. Children/orphan with total and permanent disability shall be entitled to payment of children pension or orphan pension as the case may be irrespective of age and number of children in the family.
2. Facility for payment of pension to nominee in the event of member who is unmarried or without any eligible family member to receive pension, and
3. Facility for payment of pension to dependent father/mother in the event the member dies leaving behind no eligible family members and no nomination by such deceased member

3. Facility for capital return (corpus accretion) on option formula basis

 

4. Commutation of pension up to 1/3^rd of pension amount
5. Scheme Certificate to retain membership of the Scheme till attaining the age of 58

Definitions  Employee

“Employee” as defined in Section 2(f) of the Act means any person who is employee for wages in any kind of work manual or otherwise, in or in connection with the work of an establishment and who gets wages directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment.

Membership

 

All the employees (including casual, part time, Daily wage contract etc.) other then an excluded employee are required to be enrolled as members of the fund the day, the Act comes into force in such establishment.

“Basic Wages” means all emoluments which are earned by employee while on duty or on leave or holiday with wages in either case in accordance with the terms of the contract of employment and witch are paid or payable in cash, but dose not include

1. The cash value of any food concession;

 

1. Any dearness allowance (that is to say, all cash payment by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or any other allowance payable to the employee in respect of employment or of work done in such
2. Any present made by the

 

Sec. 2(ff) “exempted employee” means an employee to whom a Scheme or the Insurance Scheme, as the case may be, would, but for the exemption granted under section 17, have applied;

Sec. 2(fff) “exempted establishment” means an establishment in respect of which an exemption has been granted under section 17 from the operation of all or any of the provisions of any Scheme or the Insurance Scheme, as the case may be, whether such exemption has been granted to the establishment as such or to any person or class of persons employed therein;

Sec. 2(g) “Fund” means the Provident Fund established under a Scheme;

 

Sec. 2(i) “industry” means any industry specified in Schedule I, and includes any other industry added to the Schedule by notification under section 4;

Sec. 2(ia) “Insurance Fund” means the Deposit-linked Insurance Scheme framed under sub- section 2 of section 6C;

Sec. 2(ib) “Insurance Scheme” means the Employees‘ Deposit-linked Insurance Scheme framed under sub-section 1 of section 6C;

Sec. 2(ic) “manufacture” or “manufacturing process” means any process for making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal;

Sec. 2(j) member” means a member of the Fund;

 

Sec. 2(k)“occupier of a factory” means the person, who has ultimate control over the affairs of the factory, and, where the said affairs are entrusted to a managing agent, such agent shall be deemed to be the occupier of the factory;

Sec2(kA) “Pension Fund” means the Employees‘ Pension Fund established under sub-section 2 of section 6A;

Sec. 2(kB) “Pension Scheme” means the Employees‘ Pension Scheme framed under sub-section 1 of section 6A;

Sec. 2(ka) “prescribed” means prescribed by rules made under this Act;

 

Sec. 2(kb) “Recovery Officer” means any officer of the Central Government, State

 

What are the offences under the Act what is the punishment for them?:

1. If any person, for the purpose of avoiding any payment to be made under the Act or the Schemes, knowingly makes any false statement or false representation, he would be punished with imprisonment upto one year, or with fine upto 5000.00 or with both.
2. If any employer makes default in payment of the employer’s contribution or the employee’s contribution payable under the Employees’ Provident Funds Scheme or paragraph 38 of the said scheme relating to the payment of administrative charges, or under section 17(3)(a) of the Act relating to the payment of inspection charges, he would be punished with imprisonment upto three years but it shall not be less than one year and a fine of Rs. 10000.00 in case of default in payment of the employee’s contribution which has been deducted by the employer from the employees’ wages and six months and a fine of a 5000.00 in any other case.
3. If any employer makes default in payment of the employer’s contribution or the administrative charges payable under the Deposit Linked Insurance Scheme under section 6-C or contravenes the provisions of section 17(3)(a) relating to the payment of inspection charges, he would be punished with imprisonment upto 1 year, but which shall not be less than 6 months, plus fine upto Rs. 00
4. If any person contravenes or makes default in complying with any other provision of the Act or any condition for exemption from any scheme, he would be punished with imprisonment upto six months but which shall not be less than 1 month and with fine upto Rs. 5000.00 or with both.
5. If any person convicted of an offence under the Act or the Schemes commits it again, he would be punished with imprisonment upto five years but which shall not be less than two years, plus fine upto Rs. 00 {Section 14 & 14(AA)}

What are the benefits provided under the Scheme?

 

The following three kinds of benefits are provided under the scheme: (1) Withdrawal benefit,

(2) Benefit of non-refundable advances, (3) Benefit of financing of Life Insurance Policies.

 

Withdrawal Benefit

 

A member can withdraw the full amount standing to his credit in the Fund in the following circumstances immediately

• Retirement after attaining the age of 55 years,
• Retirement due to incapacity for work,
• Migration for permanent settlement abroad,
• Mass retrenchment,
• Voluntary retirement,
• Closer of establishment,
• Transfer to an establishment not covered under the Act,

 

• Discharge with payment of retrenchment compensation, etc {Para 69}

 

In all the order cases of leaving services he can withdraw the full amount if he remains unemployed after the waiting period of two months unemployment.

Benefit of Non-refundable Advances

Non-refundable advances from the amount standing to the credit of a member in the Fund can be sanctioned for the following purposes:

1. purchase of a house, {Para 68B}

 

1. repayment of a loan, for housing, {Para 68BB}

 

1. unemployment due to lock-out or temporary closure, {Para 68H}

 

1. unemployment due to illness, {Para 68J}

 

1. marriage of a self of of daughter, son, sister or brother, {Para 68K}

 

1. education of son or daughter, {Para 68K}

 

1. exceptional calamity, etc. {Para 68L}

 

1. withdrawal for investment in Varishta Pension Bima {Para 68NNN}