Money Mantra: Mastering EPF Management

THE EMPLOYEES’ Provident Fund (EPF) stands as a corner­stone for salaried workers’ retirement security, blending mandatory contributions with tax-efficient growth at around 8.25 per cent interest. The most efficient management hinges on maximising contributions, vigilant monitoring, seamless transfers, and strategic withdrawals to compound returns while minimising taxes.

 Employees and employers each contribute 12 per cent of basic salary plus dearness allowance (DA), capped at  ₹15,000 monthly, yielding steady, tax-free growth. Opt for Voluntary Provident Fund (VPF) by contributing up to 100 per cent of your basic pay plus DA be­yond the mandatory 12 per cent, supercharging your corpus without employer matching obligation. This leverages EPF’s reliable returns, often outpacing equities post-tax over long horizons, as even 11-16 per cent equity gains may underperform due to taxation.

Access your EPF passbook via the EPFO portal under UAN services to track contributions, updated every six hours, ensuring employer deposits align with salary slips. Update nominee details promptly after life events like marriage to avoid disputes, and nominate via the member portal. Upon job switches, auto-transfer your EPF balance online using the UAN e-Sewa portal, preventing interest loss on inop­erative accounts after two months of unemployment.

Retain funds beyond five continuous service years for full tax exemption; early withdrawals over  ₹50,000 trigger 10 per cent TDS if PAN-linked, or 20 per cent otherwise. Under EPFO 3.0 reforms, maintain at least 25 per cent balance for emergencies, with relaxed limits like five marriages or 10 education withdrawals, processable via UPI/ATM by mid-2025. Avoid premature dips—EPF’s tax edge and compounding make it superior for retirement over alternatives like equities for risk-averse savers.

Efficient EPF handling demands discipline: contribute maximally, monitor digitally, transfer promptly, and withdraw only when essen­tial. This approach builds a robust nest egg, aligning with RBI’s push for optimised portfolio strategies.