Daily Current Affairs : 25-July-2023

The Employees Provident Fund (EPF) scheme is a crucial welfare program designed to provide financial security and stability to employees after retirement or when they leave their jobs. Administered by the Employees’ Provident Fund Organisation (EPFO), a statutory body under the Ministry of Labour and Employment, Government of India, the EPF scheme aims to encourage individuals to save funds for their post-retirement life. In the news, the government has approved an 8.15 percent interest rate on EPF deposits for the financial year 2022-23, ensuring attractive returns for the beneficiaries.

Understanding the EPF Scheme

The EPF scheme is a statutory benefit available to both employers and employees, requiring both parties to make contributions towards the fund. The amount contributed by employees accumulates in their Provident Fund Account (PF account), and the interest earned is credited to this account. The accumulated funds serve as a financial cushion for employees at the time of their retirement or when they exit their employment, subject to fulfilling certain conditions.

Ensuring Financial Security

The EPF scheme plays a vital role in securing a better future for employees by encouraging them to save a portion of their income during their working years. This disciplined savings approach ensures that employees have a significant corpus at their disposal when they retire, providing financial security during their post-retirement life.

Protecting Dependents

The EPF scheme also extends its benefits to the dependents of deceased employees. In the unfortunate event of an employee’s demise, their dependents are entitled to receive the benefits accumulated in the EPF account. This provision safeguards the financial interests of the family and provides some relief during difficult times.

Employees’ Provident Fund Organisation (EPFO)

The Employees’ Provident Fund Organisation (EPFO) is the key governing body responsible for managing the EPF scheme. It was established in 1951 through the enactment of the Employees’ Provident Funds Ordinance. The EPFO operates under the Ministry of Labour and Employment and functions with a tripartite Board known as the Central Board of Trustees.

The Central Board of Trustees oversees three significant schemes:

  1. EPF Scheme 1952:
    • This scheme focuses on building a substantial retirement corpus for employees through monthly contributions from both employers and employees.
    • The interest rate on EPF deposits is announced annually by the government to provide attractive returns on investments.
  2. Pension Scheme 1995 (EPS):
    • The Pension Scheme 1995 is an extension of the EPF scheme, aiming to provide a pension to employees after retirement.
    • The pension amount is calculated based on the employee’s years of service and average salary.
  3. Insurance Scheme 1976 (EDLI):
    • The Insurance Scheme 1976 offers life insurance coverage to EPF members.
    • In the event of an employee’s untimely demise while still in service, this scheme provides financial assistance to the nominee or legal heir.

Important Points:

  • The Employees Provident Fund (EPF) scheme is a welfare program designed to secure a better future for employees.
  • It provides financial security to employees post-retirement or when they leave their jobs.
  • In the case of deceased employees, their dependents are entitled to the benefits.
  • Both employers and employees make contributions to the EPF fund.
  • The interest earned on the EPF deposits is credited to the employee’s Provident Fund Account (PF account).
  • The EPF scheme is administered by the Employees’ Provident Fund Organisation (EPFO), a statutory body under the Ministry of Labour and Employment, Government of India.
  • The EPFO operates under the guidance of the Central Board of Trustees.
  • The EPF scheme is one of the three schemes managed by the EPFO, the others being the Pension Scheme 1995 (EPS) and the Insurance Scheme 1976 (EDLI).
  • The EPF scheme encourages individuals to save funds for retirement, promoting financial discipline.
  • The government has approved an 8.15 percent interest rate on EPF deposits for the financial year 2022-23.
  • The EPF scheme provides a financial cushion to employees during their post-retirement life.
  • It offers life insurance coverage to EPF members through the EDLI scheme.
  • The EPS provides a pension to employees after retirement, based on their years of service and average salary.
Why In News

The government, acknowledging the importance of promoting savings and financial security for employees, has taken a significant step by approving an attractive interest rate of 8.15 percent on deposits under the Employees Provident Fund (EPF) scheme for the financial year 2022-23. This move is expected to provide a much-needed boost to the retirement savings of millions of workers across the country, fostering a sense of financial stability and confidence for the future.

MCQs about The Employees Provident Fund (EPF) Scheme

  1. What is the purpose of the Employees Provident Fund (EPF) scheme?
    A. To provide medical benefits to employees
    B. To promote employees’ savings for retirement
    C. To offer housing loans to employees
    D. To provide educational scholarships to employees
    Correct Answer: B. To promote employees’ savings for retirement
    Explanation: The EPF scheme’s purpose is to encourage employees to save funds for their post-retirement life, providing financial security during their non-working years.
  2. Who administers the Employees Provident Fund (EPF) scheme in India?
    A. Ministry of Finance
    B. Ministry of Labour and Employment
    C. Ministry of Home Affairs
    D. Ministry of Human Resource Development
    Correct Answer: B. Ministry of Labour and Employment
    Explanation: The EPF scheme is administered by the Employees’ Provident Fund Organisation (EPFO), which falls under the Ministry of Labour and Employment, Government of India.
  3. What is the benefit of the EPF scheme in case of an employee’s demise?
    A. The employee’s dependents receive medical benefits.
    B. The employee’s dependents are entitled to life insurance coverage.
    C. The employee’s dependents receive the accumulated EPF fund.
    D. The employee’s dependents receive educational scholarships.
    Correct Answer: C. The employee’s dependents receive the accumulated EPF fund.
    Explanation: In the unfortunate event of an employee’s demise, their dependents are entitled to receive the benefits accumulated in the EPF account, providing financial assistance to the family.
  4. What are the three schemes operated by the Central Board of Trustees under the EPFO?
    A. EPF Scheme 1952, Education Scheme 2005, Insurance Scheme 1976
    B. EPF Scheme 1952, Pension Scheme 1995, Housing Scheme 1988
    C. EPF Scheme 1952, Pension Scheme 1995, Insurance Scheme 1976
    D. EPF Scheme 1952, Scholarship Scheme 2000, Insurance Scheme 1976
    Correct Answer: C. EPF Scheme 1952, Pension Scheme 1995, Insurance Scheme 1976
    Explanation: The Central Board of Trustees operates three schemes under the EPFO: EPF Scheme 1952, Pension Scheme 1995 (EPS), and Insurance Scheme 1976 (EDLI). These schemes focus on retirement savings, providing pensions, and offering life insurance coverage to EPF members, respectively.

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