EPFO Rules: EPFO deposits a part of the salary of the employee in the PF. Along with this, the employer also deposits some part into the PF. In this way, the money of both the employee and the employer is deposited in the PF. When the employee retires, this money is given to them. By the way, one question is where the PF money is deposited, and where is this money invested by EPFO?
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Where is PF money invested?
The money deposited in the PF is divided into three ways. Like the first part is deposited in the PF account, and the second part is deposited in the pension scheme ELS. The third part is given in the EDLI scheme insurance.
The 12 percent amount deposited by the employee is deposited in the EPF account. Interest is also given on this deposited amount. This means that the employee’s money is deposited at only one place.
Where is the employer’s money deposited?
The 12% deposited by the employer is divided into three parts. Out of this 12%, 8.33% is deposited in the EPS (Pension Scheme). 3.67% is deposited in EPF and separately in EDLI.
For example, 12% of one’s basic salary is 2000. That means your entire 2000 rupees is deposited in the EPF account. The employer also deposits 2000 rupees. Out of this, 611 rupees (3.67%) will be deposited in EPF, and 1389 rupees (8.33%) will be deposited in EPS. According to this, the employer’s contribution seems less.
Why is money deposited in EPF?
The purpose of depositing money in EPF is to give you a large amount after retirement, so that your life can be secure. Along with this, a pension is also received regularly. PF is withdrawn with some rules, regulations, and conditions. But the money from the pension scheme is not easily withdrawn.
Now, suppose you have worked for less than 10 years and are going to close your PF account. In such a case, EPS money can be withdrawn. You have to fill out Form 10C to apply. But if you have worked for 10 years or more, then you can withdraw money from EPS. In such a case, you will be eligible to get a pension and will get a pension every month after the age of 58 years.
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Where does EPFO invest money?
EPFO deposits the money deposited in it receives in options that give safe and fixed returns. Most of the money is invested in government bonds and securities. Some part is invested in public and private sector bond schemes.
For the last few years, EPFO has also started investing a part of this amount in ETF (Exchange Traded Fund) related to the stock market. Its purpose is to get returns for the long term.