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If you work in a company and PF is deducted from your salary every month, then this question must have come to your mind: where does this money go? Does it just remain deposited in an account, or is it invested somewhere? EPFO, i.e., Employee Provident Fund Organization, not only collects this money, but also invests it in fixed ways so that you can get a good amount and pension at the time of retirement.

PF money is divided into three parts.

Under the EPF scheme, both employees and employers have to contribute 12% of the basic salary every month.

1- Employee's contribution The 12% deducted from your salary goes completely into your EPF account. You also get interest on it every year, and this money is deposited completely in your name.

2- Employer's contribution The 12% amount deposited by the employer is divided into three parts.

8.33% goes to EPS (pension scheme)

3.67% goes to EPF account

Apart from this, a separate contribution is also made to EDLI (insurance scheme)

For example, if your basic salary is ₹16,000, then both sides will contribute ₹1,920-₹1,920. Out of this, only ₹587 will be seen in EPF from the employer's side; the rest will go to the pension and insurance scheme.

Where does EPFO invest your money?

EPFO does not keep the amount deposited in your PF account in cash directly with itself. It invests this amount in those schemes where there is a possibility of safe and stable returns.

Government bonds and securities: The safest investment, where there is no risk of default Corporate bonds of public and private companies: Slightly higher risk with the possibility of fixed returns ETF (Exchange Traded Fund): For the last few years, EPFO has started investing 15% of its funds in ETFs linked to the stock market Pension and insurance benefits are also available from this The 8.33% contribution deposited by the employer in EPS (Employees' Pension Scheme) becomes the basis of monthly pension after your retirement. If you have contributed continuously to the EPF scheme for 10 years, then you can start getting a pension after the age of 58. Apart from this, under the EDLI scheme, the family also gets the benefit of insurance on the untimely death of the employee. This contribution is also made by the employer. When can you withdraw the amount of EPS? If you have worked for less than 10 years and are closing your PF account, then the EPS portion can be withdrawn by filling out Form 10C. But after 10 years or more of service, you cannot withdraw EPS money, but become entitled to a pension in the future.

Why is the EPF scheme important?

The entire scheme of EPFO is based on the idea that after retirement, the employee should not only get a lump sum amount but also regular income, like a monthly pension.

That is why a part of your PF goes to schemes like pension and insurance. EPFO manages the investment in such a way that the returns remain stable and the risk is minimal.

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