India's mandatory retirement savings scheme, funded by matched employee and employer contributions.
The Employees' Provident Fund (EPF) is India's statutory retirement savings scheme, established by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and administered by the Employees' Provident Fund Organisation. Employee and employer both contribute a percentage of wages every month. The detail that trips up new employers is that the two contributions do not both land in the same place: part of the employer's share funds a pension entitlement rather than the provident fund balance the employee can see.
The Act applies to every establishment that is a factory engaged in an industry specified in Schedule I employing twenty or more persons, and to any other establishment employing twenty or more persons that the Central Government notifies. Once the Act applies to an establishment it continues to govern it, so coverage does not lapse if headcount later falls.
Section 6 of the Act sets the employer's contribution at ten per cent of basic wages, dearness allowance and retaining allowance, with a proviso allowing the Central Government to substitute twelve per cent by notification — which is the rate that applies to most establishments in practice. The employee's contribution is equal to the employer's, and an employee may choose to contribute more, though that does not oblige the employer to match the excess.
The employer's share is then divided: part is directed to the Employees' Pension Scheme and the remainder to the provident fund, and a further contribution funds deposit-linked insurance. The consequence worth explaining at onboarding is that an employee's visible PF balance grows by less than the two headline contributions imply, because the pension portion buys an entitlement rather than a balance.
The exact split, the deposit-linked insurance rate and the statutory wage ceiling are set by the schemes and by notification rather than by the Act, and they are revised from time to time. Confirm the current figures with EPFO directly before configuring payroll — this page deliberately does not restate numbers it could not verify against an official source on the date shown.
Each member holds a Universal Account Number that follows them between employers. A new joiner who already has a UAN should have their existing account linked rather than a second one created; duplicate UANs are one of the most common and most tedious payroll data problems to unwind after the fact. Capturing the UAN in the joining checklist, before the first payroll run, is far cheaper than correcting it afterwards.
The Act applies to factories in the industries listed in Schedule I that employ twenty or more persons, and to other establishments employing twenty or more persons that the Central Government notifies. Once it applies, it continues to apply even if headcount later falls below that threshold.
Because part of the employer's share is directed to the Employees' Pension Scheme rather than to the provident fund itself. That portion buys a pension entitlement, not a balance the employee can see in their PF account. Confirm the current split with EPFO, as it is set by scheme rather than by the Act.
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