FLAME Newsletter - May 02, 2012


One of the weaknesses of our age is our apparent inability to distinguish our needs from our greeds.

While planning your investment goals it is important to know what you want from your investments. Is it just the comfortable retirement or there’s more to it? This will help you make your investment plan accordingly.


The total financial corpus managed by the Employee Provident Fund of India is over Rs.2tn and there are a total of about 40 million contributing and non contributing members in about 450,000 covered establishments.


All about your Employee Provident Fund

The Employee Provident Fund, the interest which was raised to 8.6% for FY13, is a retirement planning scheme which provides tax saving in the investment stage and gives tax-free returns at the end of the investment. The Employee Provident Fund Organisation was formed in 1952 after the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 was enacted.

As per the provisions of the act, any establishment in India is required to have a registration in the EPF with the basic criterion being employment of 20 or more persons.

As per a Sep 1997 amendment in the Employees' Provident Fund Scheme 1952, both the employees and employer contribute to the fund at the rate of 12% of the basic wages, dearness allowance and retaining allowance, if any, payable to employees per month.

Apart from the provident fund function, other benefits provided by the EPF are pension on retirement, death or disablement and a lumpsum insurance payout in case of death of the member, to his nominee/family.

While some companies make the scheme compulsory, for the others, investment in the EPF is optional. Also, when a person leaves the company, he can transfer his PF to the other company where he joins.

For those who make EPF investments, the company usually gives an EPF slip at the start of the financial year. The slip has details of the person’s contribution and interest accrued in the EPF account up to the previous year. It is provided to keep a track of the account and give you an idea of the amount accumulated in the account.

EPF account number

Everyone has an EPF account number for the purpose of checking their balance and transferring their EPF account from one company to the other. You may have noticed that your account number is a series of numbers and alphabets, also called an alphanumeric number. The first two entries indicate the regional PF office in which your company contributes your money. For example, if your company contributes in the regional EPF office at Bandra, Mumbai in Maharashtra, the entry will read MH/BAN. The next entry will be in digits. This will be the employer’s code, followed by the employee’s account number.

How to read your account balance

The EPF account balance would give information on the following:

Opening balance: This is the amount in your account that you have accumulated from the start.  This amount is further bifurcated into two categories—employee’s contribution (the amount contributed by you plus the interest) and employer’s contribution (the amount contributed by the employer plus the interest).

Interest: This entry indicates the interest that has been credited to your account for the financial year just gone by.

Contributions: This entry indicates the payments made by you and your employer in the financial year just gone by.

Withdrawals: This entry indicates any partial withdrawals or advances that you may have taken.

Closing balance: This is the sum of all the entries—the opening balance plus interest accrued on the opening balance and on the contributions made in the financial year just gone by plus the contributions made in that period. Advances you may have taken would be deducted from this amount. This closing balance would then become the opening balance for the next financial year.

Tracking your EPF balance online

The EPFO launched a service in 2011 where one can log onto the site www.epfindia.com to get their EPF balance.

You will require your EPFO office where your account is maintained, your PF account number and other details such as your name and mobile number.

Once the details are entered, you will receive your balance enquiry through an SMS on the number provided.


Annuity Retirement

A deferred annuity for which the premiums, less loading are accumulated at interest and are used to purchase an annuity at a specified age.


After much discontent over the lowering of interest rates for FY12 to 8.25% from 9.5% in FY11, the government has decided to raise the rates to 8.6% for FY13. The government says that the rate was brought down earlier due to due to lower income on investment in Special Deposit Schemes, which are aimed at providing better returns to non-government provident funds and other such funds.

EPF interest rate for FY13 to be hiked to 8.6%

EPF rate trimmed to 8.25% for FY12


You may have started saving for a comfortable post-retirement life. But with inflation and other factors set to play party spoilers, do you know if how much you are saving will be sufficient for you? Use this calculator to estimate your wealth at retirement…

My wealth at retirement


FLAME (Financial Literacy Agenda for Mass Empowerment) is an IIFL initiative to promote financial literacy amongst the masses in order to make them an integral part of India's spectacular growth story.

In an era of accelerating GDP and rising per capita growth, financial literacy has become more critical than ever before such that we all reap the tangible benefits of the nation's economic prosperity. Financial inclusion has been quite high on the governmental agenda, given its emphasis on widening the Banking & Financial services network across the country. IIFL's FLAME initiative stands committed to complement this effort by helping common people gain financial growth and security though better awareness and education on the variety of financial products while avoiding the lure of and loss from unrealistic claims made by unscrupulous agents and ponzi schemes.

Our objective is to light a FLAME, as the name suggests, which will set ablaze a chain of FLAMEs across the country. The new-found light of knowledge will undoubtedly dispel the dark clouds of financial illiteracy and ensure the bright sunshine of financial growth and prosperity.

This portal is but one of the various IIFL initiatives that would be part of FLAME.

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