What is a provident fund? How does a company administer it?
The kind of provident fund I know is that a company pays10% of one's basic salary plus increments and asks the employee to contribute 10% (that is the equal amount of what company pays to the employee) upon drawing of monthly salary. Than this amount is put in a bank and is awarded to the employees whenever they need it. The bank profit is also paid to the employees.
Once the company and the employee put the provident fund monthy in the bank; does the employee have a right to get profit on the annual deposits.
- T K GLv 41 decade agoFavorite Answer
CONTRIBUTION OF EMPLOYERS
Rates of Contribution:
a) The Employees' Provident Fund Scheme
In respect of establishments employing 20 or more persons and engaged in industry notified under Section 6 of Act ( other than the Establishments. declared as sick ) 12% of the basic pay DA , Cash value of food concession and retaining allowance , if any, subject to a maximum of Rs.6500/- per month. Voluntary higher contributions are also acceptable at the joint request of the member and the employer . However, the rate of contribution is 10% in respect of the following categories of establishments:
Any establishment covered prior to 22.9.97 in which less than 20 persons are employed.
Any sick industrial company as defined in Clause(0) of Sub-Section(1) of Section 3 of the sick industrial companies ( special provisions ) Act 1985 and which has been declared as such by the Board for Industrial and Financial Reconstruction.
Any Establishment which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth.
Any Establishment engaged in manufacturing of (a) Jute , (b) Beedi , (c) Brick , (d) Coir (other than spinning sector), (e) Guar Gum Industries/Factories.
b) The Employees' Pension Scheme
From and out of employer's share of Provident Fund contributions 8.33% of the total wages limited to Rs. 6500/- per month is segregated and credited to the Employees' Pension Fund in A/C No. 10 ( w.e.f. 1-06-2001 ).
The Central Government also would contribute at the rate of 1.1 / 6% of total wages.
c) Employees' Deposit Linked Insurance Scheme:
No amount is recovered from employee's wages . Employer should pay 0.5% of total wages subject to a ceiling of Rs. 6500/- per month ( w.e.f. 1-06-2001 ).
This money generally goes to govt (EPFO) and when a employee needed it, he gets it by govt.
One can not withdraw it whenever he wants. Under certain circumstanses it is allowed to take part or full payment. Otherwise you got it, when you retires or resigns. There is no Bank rate of interest on it, you will get flat 8.5% progressive rate of interest on PF amount. EPS and EDLI amount depends upon your total length of service and last withdrawn salary.
Hope it clears.Source(s): EPFO Employee
- Anonymous5 years ago
There are 2 seperate things... A Provident Fund and a Public PF. Let uis take PPF (Public provident Fund) Public PF is not related to your company. It is something that you will pay as your savings... more like a recurring deposit for which you earn interest. Do not consider that in your case. PF on the other hand is an equal contribution from your employer and you every month... think its about 10% or 12% of your basic pay every month. If paid, it will be mentioned in you salary slip every month. The company will deposit it in a PF account which it should give you. This account can be transfered when you change your job or start fresh everytime you quit and rejoin some other company. In your case you should have taken up in 2002 itself... but better late than never. Ask the PF account number with your old company and approach the government directly to know the status. The PF account CANNOT be denied by the company or govt. It can take 2-3 months for you to get the money back... but you will get it. If your company does not disclose the account... you need to take legal opinion... you can take the help of Employee's Provident Fund Act of 1952
- Anonymous1 decade ago
it is not 10 % it is 12 %
They deposit the amount in bank each month and thats it, it is the duty for the PF office to administer it then.
Yearly you will get a Annual PF statement in which you will have details like Employee and Employer PF accumulated for last year and this year and total for that.