EPFO: What is scheme certificate, why do EPF members need it, and who is eligible? Top FAQs answered

Administered by the Employees’ Provident Fund Organisation (EPFO) under the EPF Act of 1952, EPF is a retirement savings scheme available to salaried citizens. Today, we discuss, Scheme Certificates issued by the body to members.

Scheme Certificate: Top FAQs answered

What is a scheme certificate? Scheme certificate is issued to members who withdraw their EPF contribution but wish to retain their membership with EPFO, to avail pension benefits on attainment of retirement age.

Who is eligible to get a Scheme Certificate? A member whose service is 10 years or more and has not yet attained the age of 58 years will be mandatorily issued scheme certificate.

Can you choose avail scheme certificate before retirement? Yes. A member whose service is less than 10 years can avail the Scheme Certificate to carry forward his pension service, but it is not mandatory for such member.

What are the advantages of taking a Scheme Certificate? It facilitates transfer of Pension Accounts when the employment is changed. Upon joining a new job, Scheme Certificate ensures that previous pensionable service is added to pensionable service rendered with the new employer thereby, increasing the amount of pension benefits. Also, if the holder of scheme certificate dies, the family can claim the pension using Scheme Certificate.

Can a holder with a service period of 8 years avail withdrawal benefit on surrender of Scheme Certificate? Yes. But it is advisable that the member should complete 10 years of pensionable service so that he gets eligible for pension under the EPS 1995 on attaining the age of 50 years (early/reduced pension) or 58 years (superannuation pension).

EPF scheme: Key highlights

Rate of interest: The current EPF and voluntary provident fund (VPF) interest rate is 8.25%.

Contributions: The scheme functions through joint contributions from both the employer and employee, wherein you receive the lump sum corpus at retirement.

Subscribers: Eligibility for an EPF account includes the mandatory enrolment of salaried individuals with basic pay and dearness allowance of up to ₹15,000. You can also opt for voluntary provident fund (VPF) if basic pay and dearness allowance (DA) exceed ₹15,000 per month.

Tax exemption: Employee contributions up to ₹1.5 lakh annually are exempt under Section 80C of the old tax regime. Employers' up to 12% contribution (below ₹7.5 lakh) is exempt under the old and new tax regimes. There is no similar benefit at present under the new tax regime.

Tax benefit: Further, for employees, interest on accumulated contribution up to ₹2.5 lakh is tax-free, while interest on the employer's contribution is tax-free.

EPF withdrawal through UPI soon?

The EPFO will soon enable the direct transfer of provident fund into member accounts through Unified Payment Interface (UPI), according to Union Labour Minister Mansukh Mandaviya.

• He added that testing is completed and the service is part of various initiatives the retirement fund body has undertaken to improve the quality and delivery of service.
• According to Mandaviya, the project includes freezing a certain proportion of the EPF account, with a large chunk made available for withdrawal through the member's bank account via UPI.
• Subscribers will be able to see the eligible EPF balance available to transfer into their seeded bank accounts.
• They will be allowed to use their linked UPI PIN to complete the transaction, ensuring a secure transfer of money into their bank accounts.
• Once the money is transferred into bank accounts, members can use it as they wish, such as making electronic payments or withdrawing cash at bank ATMs with debit cards.

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