2. The Employee’s Provident Funds and Miscellaneous Provisions Act, 1952
Retirements benefits in the form of provident fund, family pension and deposit linked insurance are available to the employees under the Employees Provident Fund (and Miscellaneous Provisions) Act, 1952. As on 31st December 1985, it covered 173 classes of establishments employing 20 or more persons all over India except Jammu and Kashmir.
a) Coverage
The Act is applicable to all factories, mines, oilfields, plantations, ports. Railways, ships or establishments in which 10 or more workers are employed. All persons employed in these establishments are eligible for gratuity irrespective of their wages. The Central Government is empowered to extend the Act to any establishment.
b) Benefit
A provident fund is created with a purpose of providing financial security and stability to employees. A person starts his contribution in the PF fund once he joins a company as an employee. The contributions are made on a regular basis. The primary purpose of PF fund is to help employees save a fraction of their salary every month so that he can use the same in an event that the employee is temporarily or no longer fit to work or at retirement.
Employers and employees both contribute @12% of wages in contribution accounts. Further, the employers also contribute towards administration of the benefits under the EPF & MP Act.
The Act provides for the following schemes:
i. Provident Fund Scheme, 1952
Under the contributory fund scheme, monthly deductions from the employee’s salary are made. The employer contributes an equivalent amount. The total contributions are deposited with the Provident Fund Commissioner or invested in the prescribed manner. An employee an obtain advances, and permanent withdrawals (after 15 years of service) for construction of house, higher education/marriage of children, purchase of car, etc. on retirement, death, migration leaving service, the full balance at his credit with interest is payable.
ii. Employee’s Pension Scheme, 1995
The Employees Pension Scheme (EPS) was brought into force in the year of 1995 to cater to the employees of the organized sector. The scheme is applicable to all employees who are covered under the Employees Provident Fund (EPF) Scheme. Employees covered under this scheme will receive pension on a permanent basis, the pension amounts will eventually pass on to the family members upon the death of the employee.
iii. Employee’s Deposit Linked Insurance Scheme, 1976
Under this scheme the benefit is provided to the legal heir/nominee of the deceased employee who was the member of the scheme at the time of the death. According to revised scheme payment of benefit amount to be 20 times of the wages or based on the deposit in the Provident Fund, whichever is less. With the increase in the wages ceiling from 6500/- to 15000/- from 01.09.2014, the maximum benefit amount has become 3 lakh and an additional 20% of the benefit amount calculated is also paid.