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EPFO Marks 72nd Foundation Day with Record Membership Growth

31 October 20245 mins read by Angel One
EPFO celebrates 72 years, announces a record addition of 1.89 million members in April 2024, reflecting strong youth and female participation, and sets an 8.25% interest rate.
EPFO Marks 72nd Foundation Day with Record Membership Growth
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The Employees’ Provident Fund Organisation (EPFO) celebrates its Foundation Day on November 1 each year. The year 2024 marks EPFO’s 72nd Foundation Day. This government organisation operates under the Ministry of Labour & Employment, and its Central Board of Trustees was formed by the Central Government through the Employees’ Provident Funds and Miscellaneous Provisions Act of 1952.

About EPFO

The Employees’ Provident Fund Organisation (EPFO) is a government body in India that oversees social security and retirement plans for employees. EPFO manages the Employees’ Provident Funds and Miscellaneous Provisions Act of 1952, which is the main retirement benefits scheme in India. Its key responsibilities include:

  • Regulating and managing provident funds.
  • Administering retirement plans that consist of a mandatory provident fund, a basic pension scheme, and an insurance scheme for disability or death.
  • Managing social security agreements with other countries.

Number of Beneficiaries Added Under EPS India FY 2016-2023

In the financial year 2023, over 11 million people joined India’s Employees’ Pension Scheme (EPS), an increase from the previous year. However, there hasn’t been a sharp rise in new enrollments over recent years. The COVID-19 pandemic caused significant job losses and led many employees to opt out of auto-enrolled pensions. This made it difficult for the government to track exactly which employees stopped saving or contributing since the lockdown in late March 2020.

April 2024 Marks Record Growth in EPFO Membership with a 31% Monthly Surge

The Employees’ Provident Fund Organisation (EPFO) saw its highest monthly growth in net membership in April 2024, with an addition of 1.892 million members, according to provisional payroll data released on June 20, 2024. This increase is the largest recorded since EPFO began publishing payroll data in April 2018 and marks a strong 31.29% rise from March 2024. Year-over-year, net membership growth in April 2024 was up by 10% compared to April 2023, indicating steady expansion in EPFO’s member base.

Young adults, specifically those aged 18-25, made up 55.50% of these new additions, reflecting a growing number of first-time job seekers joining the formal workforce. Additionally, about 1.453 million members exited and rejoined EPFO establishments in April, showing a 23.15% increase over March. This trend suggests active job transitions within companies covered by EPFO, with employees choosing to retain their social security benefits.

In terms of gender, female membership rose notably, with 2,49,000 new female members joining, marking a 35.06% increase in net female additions compared to March 2024. Regionally, Maharashtra, Karnataka, Tamil Nadu, Gujarat, and Haryana led in net member additions, together making up 58.30% of the total. Maharashtra was the largest contributor, making 20.42% of net additions. Key industries such as expert services, commercial trading, and engineering saw substantial growth, with expert services alone contributing 41.41% to the total net additions.

Benefits of EPF

  1. Retirement Benefits: Employees receive a lump sum payment at retirement, which includes the interest earned. The employee’s average salary and years of service determine the pension amount.
  2. Disability Benefits: If an employee becomes disabled, they are entitled to a minimum pension.
  3. Survivor Benefits: Dependents of deceased employees can receive benefits.
  4. Tax Benefits: The interest earned on EPF deposits is exempt from taxes.
  5. Higher Interest Rates: EPF typically offers a higher interest rate compared to other savings options.
  6. Employees’ Deposit Linked Insurance Scheme: Employees are covered under this insurance when they join EPF.

Contributions

The employer’s total contribution is split into two parts: 8.33% goes to the Employees’ Pension Scheme, while 3.67% goes to the Employees’ Provident Fund. All contributions are recorded in the EPF member passbook. The entire contribution made by the employee is directed solely into their own provident fund.

Withdrawals

EPF members can withdraw funds either partially or completely. A complete withdrawal is permitted when an employee retires or if they are unemployed for more than 2 months. Partial withdrawals can be made for specific reasons, such as medical expenses, marriage, or repaying a home loan.

EPF Interest Rate for FY2023-24

For the FY 2023-2024, the interest rate for the Employees’ Provident Fund (EPF) is set at 8.25%. The EPFO Central Board of Trustees reviews this interest rate every year in consultation with the Ministry of Finance. The announcement of the new rate typically happens in the first quarter of the following financial year.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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