Most salaried employees in the private and public sector mandatorily have a Provident Fund (PF) account with the Employees’ Provident Fund Organisation. However, many of them do not even know what it is for, let alone the added benefits provided to PF accountholders.
In a PF account, the employer of a person deposits a certain amount of money on which the EPFO pays an interest. The money accumulated can be withdrawn from the account after the person retires from employment.
Apart from this basic facility the PF account provides these benefits to the accountholders:
1. Premium-free insurance
Each PF accountholder is entitled to a life insurance cover of upto Rs 7 lakhs without paying any periodic premium ever.
2. The second pension
The PF account also acts as an additional pension account. If there is a regular contribution to the PF account for at least 15 years and if the accountholder has crossed 58 years of age then he or she is eligible for a pension.
3. Emergency loan
During emergencies, PF accountholders can borrow money against their PF account balance. The rate of interest levied on the loan is only 1 per cent. However, the loan must be repaid in 36 months.
4. Emergency withdrawal
PF accountholders can also withdraw money from their account apart from borrowing against it. However, there are certain conditions for the withdrawal such as a medical or financial emergency.
5. Loan repayment
PF accountholders can use upto 90 per cent of the accumulated money in their account for home loan repayment, for buying or constructing a new house.