Retirement benefits in the form of provident fund, family pension and deposit linked insurance are available to the employees under the Employee’s Provident Fund (and miscellaneous Provisions) Act 1952. The Act is applicable to a factory in any industry specified in schedule I and in which 20 or more persons are employed or which the Central Government notifies in the official Gazette. The Act does not apply to cooperative societies employing less than 50 persons and working without the aid of power. It also does not apply to new establishments for 3 years from the date of establishment. The Government is empowered to grant exemption from the operation of this Act to any class of establishments under certain conditions.
The schemes under this Act are administered by a Tripartite Central Board of Trustees consisting of representatives of employers, employees and the Government. The Act provides for the following benefits.
Benefits of Employees Provident Fund Act 1952
(i) Provident Fund Scheme – Under the contributory provident 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 can obtain advances, and permanent withdrawls (after 15 years of service) for construction of house, higher education/marriage of children, purchase of car etc. On retirement, death, migration, leaving service etc. the full balance at his credit with interest is payable.
(ii) Employee’s Family Pension Scheme, 1971 – Under the Employee’s Family Pension Scheme, pension is paid to the widow/children of the employee who dies while in service. Under the new pension scheme, pension is payable to the employee after his retirement in place of provident fund. According to the new regulations all new employee will have to opt for pension scheme. Persons already employed can switch over from provident fund to pension scheme.
(iii) Employee’s Deposit Linked Insurance Scheme, 1976 – The Employee’s Deposit linked Insurance Scheme 1976 was introduced for the members of the Employee Provident Fund with effect from August 1976. On the death of the member, the person entitled to receive the provident fund accumulations would be paid an additional amount equal to average balance in the provident fund account of the deceased during the preceding three years, if such average balance was not below Rs. 10,000 during the said period. The maximum amount of benefit under this scheme is Rs. 35,000 and the employees do not have to make any contribution for it.