Here’s a breakdown of the terms and calculations related to your EPF (Employee Provident Fund) passbook:
Key Columns in the Passbook
EPF Wages:
- The monthly base salary considered for EPF contributions.
- Typically includes Basic Salary + Dearness Allowance (DA).
- It is the amount used to calculate contributions for both the employee and employer.
EPS Wages:
- The portion of EPF wages that is considered for the Employee Pension Scheme (EPS) contribution.
- This is capped at15,000 per month. Even if your EPF wages exceed this, the employer’s contribution to EPS is calculated on15,000.
Employee Share:
- 12% of EPF wages is deducted from your salary and deposited into the EPF account.
Employer Share:
- The employer also contributes 12% of EPF wages. However, this is divided as follows:
- 3.67% of EPF wages goes to the EPF account.
- 8.33% of EPF wages goes to EPS.
Pension Contribution:
- This is the 8.33% of the employer’s contribution that goes to the EPS.
Answers to Common Questions
1. Why are EPF Wages and EPS Wages the Same?
- Initially, they are both based on your Basic + DA. However:
- For EPF, there is no upper cap.
- For EPS, contributions are capped at15,000, even if EPF wages are higher.
2. Difference Between EPF and EPS:
- EPF: The main Provident Fund account where contributions grow with interest. It’s a long-term savings fund.
- EPS: A pension scheme for retirement benefits. The balance here does not earn interest like EPF, but it ensures a monthly pension post-retirement (based on years of service and wages).
3. Employer’s Withdrawal of EPF Money:
- Employers cannot withdraw your EPF money. The term likely refers to how the system adjusts contributions during partial withdrawals or transfers.
4. Calculation of Contributions:
- Employee Share: 12% of EPF wages (credited fully to EPF).
- Employer Share:
- 3.67% to EPF.
- 8.33% to EPS (subject to15,000 cap on EPS wages).
5. What Happens When You Transfer EPF After Switching Jobs?
- The entire EPF balance (both employee and employer contributions) is transferred.
- EPS contributions are also tracked, but the actual balance in EPS doesn’t move. Instead, the service period is added to the new account for pension calculation.
6. What Happens If You Don’t Transfer EPF?
- The old EPF account remains active, but:
- It stops receiving interest after 3 years of inactivity.
- It complicates management and tracking multiple accounts.
7. Amount Transferred During EPF Transfer:
- The entire EPF balance (employee share + employer share credited to EPF).
- The EPS contributions are not directly transferred but reflected as service continuity for pension calculations.
Example Calculations:
Assumptions:
- EPF wages:25,000
- Employee Contribution: 12% =3,000
- Employer Contribution: 12% =3,000
- To EPF: 3.67% =917.50
- To EPS: 8.33% =2,082.50
Monthly Contributions:
- Employee Share:3,000 (EPF only).
- Employer Share:917.50 (EPF) +2,082.50 (EPS).
Annual Contributions:
- Total EPF Contributions (Employee + Employer):47,010.
- Total EPS Contributions:24,990.
Quick Tips:
- Regularly check your passbook for accuracy.
- Always transfer your EPF account when changing jobs.
- Use the UAN portal to consolidate and manage EPF accounts.
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