On 12 Apr 2017, the EPFO has proposed to provide benefits of up to Rs 50,000 at the time of retirement to subscribers who have contributed to the scheme for over 20 years to all those members on retirement at 58 or 60 years. It has also proposed a minimum sum assured of Rs 2.5 lakh in the event of the death of a subscriber. This article covers what is EPF Loyalty Bonus? Who will get it? How much is EPF Loyalty Bonus? When will you get EPF Loyalty Bonus? What is minimum sum assured in EDLI Insurance?
EPF Loyalty Bonus
On 12 Apr 2017, the Employees’ Provident Fund Organisation’s or EPFO proposed to provide benefits of up to Rs 50,000 at the time of retirement to subscribers who have contributed to the scheme for over 20 years to all those members on retirement at 58 or 60 years.
- Those members whose average basic wages are up to Rs 5,000 will get a loyalty-cum-life benefit of Rs 30,000.
- The members with wages of Rs 5,001-10,000 Will be eligible for Rs 40,000 benefit.
- All those members getting more than Rs 10,000 monthly wage will be eligible for Rs 50,000 loyalty-cum-life benefit under the proposed scheme.
The EPF Loyalty Bonus will also be provided in case of permanent disability even if the members have contributed for less than 20 years, the EPFO board decided.
EDLI Insurance on Death of EPF Member
The EPFO’s apex decision making body, the Central Board of Trustees (CBT), has recommended a minimum sum assured of Rs 2.5 lakh in the event of death of a subscriber.
At present, the dependants of the deceased get a sum assured of up to Rs 6 lakh. There is no provision of minimum insurance and any benefit for surviving members or in cases of permanent disability under the existing scheme EDLI. Our article EDLI, Employee Deposit Linked Insurance Scheme covers EDLI in detail
All employees who join the Employees’ Provident Fund are covered by the EDLI or Employee’s Deposit Linked Insurance Scheme, 1976. EDLI provides a lump sum payment to the insured’s nominated beneficiary in the event of death due to natural causes, illness or accident.
At present, only subscribers who have worked for one year continuously in the same organisation is eligible for the insurance cover. The nominee of the subscriber gets 20 times of average wage drawn during the past 12 months with 20% bonus on it. This means, on a wage ceiling of Rs 15,000 every month, the maximum amount assured works out to be Rs 3.6 lakh.
In Sep 2015, the EPFO announced an increase in the maximum amount assured under its Employees Deposit Linked Insurance Scheme (EDLI) to Rs 6 lakh from Rs 3.6 lakh. The claim amount of the EDLI is decided by the last drawn salary of the employee. The claim amount would be
- 30 times the salary.For this calculation, salary is basic pay plus DA or Dearness Allowance. The upper limit of wage for the EDLI is Rs 15,000.
- Along with this, the bonus of Rs 1.5 lakh is also given.
- Thus, the maximum EDLI claim amount would be Rs 6 lakh [(30 x15,000) + 1,50,000].
The premium of EDLI is funded by the employer, who contributes 0.5% of monthly basic pay (capped at a maximum of Rs 15,000) as a premium for life cover in case the organization does not have a group insurance scheme for its employees. The breakup of the employee and employer contribution is given below. Our article Basics of Employee Provident Fund: EPF, EPS, EDLIS talks about EPF, EPF, EDLIS in detail.
| Scheme Name | Employee contribution | Employer contribution |
| Employee provident fund | 12% | 3.67% |
| Employees’ Pension scheme | 0 | 8.33% |
| Employees Deposit linked insurance | 0 | 0.5% |
| EPF Administrative charges | 0 | 1.1% |
| EDLIS Administrative charges | 0 | 0.01% |
From when will the EPF Loyalty and Minimum EDLI be effective?
The board has recommended such benefits in view of a huge EDLI corpus of Rs 18,119 crore following the addition of interest that accrued on investment of this fund.
Initially, these will be provided for two years on a pilot basis and will be reviewed thereafter.
However, these benefits are subject to approval from the government.
Related Articles:
All About EPF,EPS,EDLIS, Employee Provident Fund
- EDLI, Employee Deposit Linked Insurance Scheme
- EPF Withdrawal before 5 years,TDS,Form 15G,Tax and ITR
- Transfer EPF account online : OTCP
- How to Correct EPF Details like Name,Father Name,Date of Joining
Sir if a seasonal worker last 12 months is 5 months salary and 7 months retainning so how we calculate her edli money and it is got bonus money also dear sir plase response me
How can we calculate EPF on consolidated salary? Please reply soon….I m working as Accounts Clerk in a private company..my monthly salary is Rs 13,000.
No,
Gross pay for the purpose of PF calculation is different from the term gross pay which is typically used in the payroll context. For the sake of clarity, we will use the term PF Gross to denote the salary to be considered for PF calculation. PF Gross includes Basic, DA, Conveyance, Other Allowance etc. (heads of pay which are included for PF calculation) and excludes House Rent Allowance, Bonus etc. (heads of pay which are excluded for PF calculation) as per the provisions of the PF Act.
According to the Employees Provident Fund and Miscellaneous Provisions Act, 1952 , called the PF Act, the statute which governs Provident Fund contribution, the PF contribution should be calculated as 12% of “basic wages” (plus DA, cash value of food concession, and retaining allowance, if any), subject to a maximum of Rs 6500/- per month. In case an employee earns basic wages (plus DA, cash value of food concession, and retaining allowance, if any) of more than Rs 15000 per month, they can opt for a higher PF deduction (more than 12% of Rs 15000) at the joint request of the employee and the employer.
Here is what is stated in Section 2b of the PF Act.
2(b) “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-
(i) the cash value of any food concession;
(ii) any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;
Employers are mandated to calculate PF as 12% of PF Gross only for employees whose PF Gross is Rs 15000 or less per month. For employees whose PF Gross is more than Rs 15000 per month, the organization could continue deducting PF on Basic head of pay (if the amount paid under Basic is above Rs 15000 per month) or restrict PF Gross to Rs 15000 for the purpose of PF calculation.
Rohit.m.Patel 1 years