Tax benefits

Apart from the fact that an employee’s contribution towards an EPF account is eligible for tax exemption under Section 80C, the interest rate earned is exempt from income tax. According to experts, your EPF account continues to earn interest even if it has been lying dormant for more than 3 years

Lifelong pension

While employers and employees both contribute 12% of wages in EPF, 8.33% of the employer’s share is diverted towards the Employees’ Pension Scheme (EPS). According to the retirement fund body, 10 years of contributory membership ensures lifelong pension under Employees’ Pension Scheme 1995.

Insurance benefit

Then there are the benefits promised under the Employees Deposit Linked Insurance (EDLI) Scheme, which is an insurance cover provided by the EPFO. The registered nominee will receive a lump-sum payment in the event of the death of the person insured, during the period of the service.

Premature withdrawal option

While EPFO strongly advises against treating PF money as a bank account – after all, the social security benefits accrue only when continuity is maintained – the body allows its members to make partial withdrawals after 5-10 years of service for meeting specific needs including medical treatment, home loan repayment and unemployment.

Higher returns

That’s not all. There is also the possibility of higher returns on your PF kitty in the future. The EPFO invests 5-15% of its investible deposits in exchange traded funds (ETFs).