EPF: Your Guide to Retirement Security and Employer Match
By Surya Prakash
Financial Analyst & Editor
What is the Employee Provident Fund (EPF)?
The Employee Provident Fund (EPF) is a statutory retirement benefit scheme managed by the EPFO. It is mandatory for salaried employees in organizations with 20 or more staff. Each month, both the employee and employer contribute 12% of the basic salary plus dearness allowance into the employee's PF account, accumulating a secure corpus for retirement.
How Employer Contribution is Split: EPF vs. EPS
While the employee's 12% contribution goes entirely to the EPF account, the employer's 12% share is split:
- 3.67% is allocated to the EPF account.
- 8.33% is diverted to the Employee Pension Scheme (EPS) to provide a monthly pension to the employee after age 58, subject to a salary cap of ₹15,000.
EPF Withdrawal Rules and Loans
EPF is designed as a retirement tool, so the full amount can only be withdrawn upon retirement or after 2 months of unemployment. However, partial withdrawals (advances) are permitted for critical needs like medical emergencies, purchasing a home, marriage, or children's higher education.