The EPF and ESI are two popular schemes launched by the Government of India to ensure better financial security for the working class. Let’s explore these bit by bit.
EPF: The Employees Provident Fund is a scheme introduced by the Government Of India. This scheme is run by Employees Provident Fund Organization (EPFO) and comes under the provisions of Employees Provident Fund and Miscellaneous Provisions Act, 1952. It is a scheme which provides benefits of saving for the future as it helps employees to save some part of their salary or income for their retirement.
How does the scheme work?
Under the EPF scheme, an employee is supposed to contribute a partial amount from his/her salary or income which is saved. This amount will be refundable after retirement. It requires the contribution of both the employees and the employer. The contribution made by the employees and the employers to the EPF account will be 12% of the basic salary plus dearness allowance plus retaining allowance. The total contribution towards the Employees Provident Fund account made by the employee is 12% and by the employer is 3.67% .
The accumulated corpus is the employees’ retirement savings which should generally be utilized by the employee during the post-retirement phase. However, during the time of any financial crisis, the employee can withdraw the accumulated corpus anytime within his/her year of employment.
Withdrawals from the EPF Account:
Any person who gets retired or has attained the age of 55 years can withdraw from the EPF account according to the EPF Act. The balance of EPF includes the contribution made by the employees and the employer along with the accrued interest. On December 6 2018, it was made clear that an employee can withdraw 75% of their EPF corpus after remaining unemployed for a month and in case if an employee is out of employment for straight 2 months or more then he can withdraw 25% of EPF.
Perks of EPFO:
-It provides pension benefits.
-In case of death of the EPFO member the pension will be provided to the family member.
-The employee also gets the benefit of withdrawing the pension amount in full if they are unemployed for a duration of 60 days or more.
Employees State Insurance:
Employee State Insurance is an autonomous body with a statutory recognition.ESI is a scheme which deals with providing finance, social security and health insurance to the employees.Its funds are managed by the Employees State Insurance Corporation(ESIC) according to the provisions of ESI ACT 1948.It provides help to the employees in the time of uncertain events like sickness, injury during employment, physical disability and more.The scheme helps you with both cash and healthcare benefits.
Employee’s State Insurance Act has established the Employees State Insurance Corporation(ESIC) for raising loans and taking measures for discharging loans with an official permission of the Central Government, it can also acquire both movable and immovable property and all incomes from the property shall be vested with the corporation. The corporation under its supervision can set up hospitals either voluntarily or with the collaboration with state government or other private entities but in most of the cases hospitals and dispensaries are run by respective state governments.
Who is eligible for ESI?
All types of establishments such as factories, restaurants, cinema theatres, offices, medical and other institutions are eligible for the ESI Scheme. Such units are called Covered Units. To avail the benefits under this scheme the employees of a covered unit should have monthly income not exceeding Rs.21,000 (excluding overtime, bonus, leave encashment)per month.
How does the scheme work?
The scheme works when the contribution is made by the employees from their wages. The employer is responsible for collecting the ESI fund by deducting the amount from the employees wages and combining it with their own contribution. The combined contribution should be deposited within 15 days of the last day of the Calendar month by the employer. The payment can be made by the authorized bank like the State Bank of India. The payment may also be done online.
Perks provided by ESI are:
Following are the advantages an employee would get by the ESI Scheme:
- Medical benefit
- Sickness benefit
- Maternity benefit
- Disablement benefit
- Depenedants benefit
- Expense of funeral
- Allowance on rehabilitation.
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