In today’s fast-paced world, financial security is a top priority for most individuals. With the rising cost of living and uncertain job market, having a stable source of income is crucial. This is why many people opt for various investment schemes to secure their future. One such scheme is the Employee’s Provident Fund (EPF), which is a retirement benefit scheme for employees in India. However, there is a common question that arises among subscribers – Why keep the balance in EPF if it is the subscriber and employer’s money? In this article, we will explore the importance of maintaining the balance in EPF and how it can benefit the subscribers in the long run.
Firstly, let us understand what EPF is and how it works. EPF is a government-backed savings scheme that is designed to provide financial security to employees after their retirement. Both the employee and employer contribute a certain percentage of the employee’s salary towards the EPF account. The accumulated amount, along with interest, is then paid out to the employee upon retirement. This ensures that the employee has a steady income even after they stop working.
Now, coming back to the question at hand – Why keep the balance in EPF if it is the subscriber and employer’s money? The answer is simple – to secure the future. EPF is not just a savings scheme; it is a retirement benefit scheme. It is meant to provide financial stability to employees during their retirement years. By keeping the balance in EPF, subscribers are ensuring that they have a steady source of income even after they stop working. This is especially important in today’s world, where the cost of living is constantly increasing, and the job market is becoming more and more uncertain.
Moreover, the EPF balance is not just the subscriber’s money; it is a joint contribution by the employee and the employer. The employer’s contribution is a form of additional income for the employee, which they can use to secure their future. By withdrawing the balance before retirement, subscribers are essentially losing out on this additional income and putting their financial stability at risk.
Another important aspect to consider is the tax benefits of maintaining the balance in EPF. The contributions made towards EPF are eligible for tax deductions under Section 80C of the Income Tax Act. This means that subscribers can save a significant amount of money on taxes by contributing towards their EPF account. However, if the balance is withdrawn before the completion of five years, the tax benefits will be reversed. This will result in a higher tax liability for the subscriber, which could have been avoided by keeping the balance in EPF.
Furthermore, the EPF balance also acts as a safety net for subscribers in case of emergencies. In the unfortunate event of the subscriber losing their job, they can withdraw a certain percentage of their EPF balance to meet their financial needs. This ensures that they do not have to rely on external sources for financial assistance and can maintain their standard of living.
It is also worth mentioning that the EPF balance earns a decent rate of interest, which is higher than most savings accounts. This means that by keeping the balance in EPF, subscribers are not only securing their future but also earning a good return on their investment. This interest is compounded annually, which means that the balance will continue to grow over the years, providing a substantial amount of money upon retirement.
In addition to the above reasons, keeping the balance in EPF also promotes a savings culture among employees. By contributing towards their EPF account, employees are instilling a habit of saving for the future. This will not only benefit them but also their families and the society as a whole. It is a step towards financial independence and a secure future.
In conclusion, the EPF balance is not just the subscriber and employer’s money; it is a means to secure the future. By keeping the balance in EPF, subscribers are ensuring a steady source of income during their retirement years. It also provides tax benefits, acts as a safety net during emergencies, and promotes a savings culture. Therefore, it is essential for subscribers to understand the importance of maintaining the balance in EPF and refrain from withdrawing it before retirement. After all, it is a small sacrifice for a secure and stable future.
