The Employees Provident Fund Organization (EPFO) introduced a Provident Fund Scheme for employees, witnessing a steady increase in the number of subscribers benefiting from it.
Under this scheme, employees receive both pension and a lump sum amount post-retirement.
Understanding EPFO Rules
Contributions to the Provident Fund (PF) are made jointly by the company and the employee, ensuring retirement benefits. However, many EPFO rules remain unknown to subscribers.
Exploring Loyalty-cum-Life Benefit
One significant rule is the Loyalty-cum-Life Benefit, offering a direct benefit of Rs 50,000 to employees, contingent upon fulfilling specific conditions.
Conditions for Loyalty-cum-Life Benefit
EPF account holders are advised to maintain only one account and contribute continuously for 20 years to qualify for the Loyalty-cum-Life Benefit, a recommendation put forth by the CBDT.
After CBDT’s recommendation, EPFO initiated the provision of this benefit, granting an additional Rs 50,000 to subscribers contributing for 20 years.
Benefit Allocation
The amount of benefit varies based on the employee’s basic salary:
1) Employees with a basic salary of Rs 5,000 receive Rs 30,000.
2) Those with salaries ranging from Rs 5,001 to Rs 10,000 receive Rs 40,000.
3) Employees earning above Rs 10,000 receive Rs 50,000.
To maximize the Loyalty-cum-Life Benefit, maintaining the same EPF account when changing jobs is advisable.
While PF account transfer is now automated, updating information with both old and current employers is recommended.
Experts caution against premature PF withdrawal during employment, as it may result in a loss of retirement funds, additional income tax, and forfeiture of pension and loyalty benefits.
