PF Nomination Process: Ensuring Smooth Transfer of Benefits to Nominees

What is Provident Fund

The Provident Fund is a scheme by the government for providing financial security to employees after their retirement. It consists of different types, such as Employees Provident Fund (EPF) and Public Provident Fund (PPF). The contribution of these funds are accumulated by both the employer and the employee.

Types of PF

There are different types of PF that can be used depending on the nature of your employment. Let’s take a look at some common types of PF available in India.

1. General Provident Fund - It is generally provided to government employees. They need to contribute a particular percentage of their income till their employment. The government pays them a certain amount of interest after a certain period of time.

2. Employees Provident Fund - EPF is a social security system that provides retirement benefits to private sector employees. Employees contribute 12% of their basic salary, which is up to Rs 15,000. Besides retirement benefits, EPF members are also entitled to receive pensions, which is conducted by Employees Pension Scheme (EPS) after 10 years of employment.

3. Public Provident Fund - PPF is a long term savings option offered by government that helps individuals build a secure financial future. It serves as financial security for future needs such as education, home purchases, or medical expenses. 

Benefits of having PF account

1. Retirement

A PF account provides financial relief after retirement as it provides saved funds and interest. It provides future financial security for employees.

1. Partial Withdrawals

PF accounts allow employees to partially withdraw their funds under specific circumstances. These circumstances may include medical emergencies, house purchases & renovations, or wedding expenses.

1. Contribution Limits

Employees contribute 12% of their basic salary to their PF account. Employees can increase the limit by investing more in their PF account and earning more returns. Employers can also increase this limit beyond 12% to attract talent.

1. Portability

PF accounts have a portable mechanism that allows workers to transfer their PF balance while changing jobs. This mechanism required UAN in the process of transferring and tracking the PF balance.

Importance of PF Nomination

PF Nomination is the process of nominating an individual by an account holder who can receive funds in the event of the untimely demise of the account holder. There are some important factors in PF nominations:

1. Ensuring Benefits Reach the Right People 

In case of undemisely death of the account holder, all PF full and final settlement is entitled to the nominated person. This makes sure that the benefit of the funds belongs to the deserving family members without any legal complications. 

1. Flexibility to Update Nominee

The individual for nominee can be updated anytime by the account holder, depending on the personal circumstances. These circumstances might include changing life events, marriage, or the birth of a child.

1. Simplified Claim Process

The ability to appoint an authorized nominee simplifies the application process and reduces hurdles and burdens for legal beneficiaries. The nomination avoids family disputes, and the nominee is clearly entitled to receive PF benefits.

PF Nomination Process

There are 2 types of processes for nominating a beneficiary. Let’s understand both of these processes:

Offline Process (Form 2 for EPF)

1. Obtain Form 2 from your employer or the EPFO website.

2. Fill in the required details, including the nominee’s name, address, relationship, and share of benefits.

3. Submit the completed form to your employer for further processing.

Online Nomination via EPFO Portal

1. Log in to the EPFO member portal using your Universal Account Number (UAN) and password.

2. Navigate to the ‘Manage’ tab and select ‘E-Nomination.’

3. Fill in the nominee details and upload necessary documents.

4. Save and confirm the nomination.

Details Required for Nomination

• Full name of the nominee

• Address

• Relationship with the PF account holder

• Share percentage (if multiple nominees)

Updating PF Nominee Details

Online Update via EPFO Portal

1. Log in to the EPFO portal.

2. Select ‘E-Nomination’ under the ‘Manage’ tab.

3. Edit the necessary details and save the changes.

Offline Update

1. Fill out the relevant section in Form 2.

2. Submit the form to your employer for processing.

Conclusion

Getting your PF account nominated gives you peace of mind that your savings are going to the right person. PF nomination is not just a formality but a crucial and beneficial step in securing your income. To keep your power of attorney details up to date, visit the EPFO ​​portal or get in touch with your PF consultant.