EPF is a retirement benefits scheme for employees administered by the Employees Trust Fund Organization, whereas ETF is a long-term investment plan formed by the business for the benefit of employees.
The Ministry of Finance oversees both the Employee Provident Fund and the Employee’s Trust Fund. They can be seen of as retirement programs that provide benefits to employees once they retire. Employers and employees both contribute to the Employee Provident Fund and the Employee Trust Fund, respectively.
What exactly is the Sri Lanka ETF?
The Employees’ Trust Fund (ETF), a social security program, was established on 1 March 1981 by the Parliament of the Democratic Socialist Republic of Sri Lanka under Act No.46 of 1980 to promote I employee ownership, employee welfare, and economic democracy through participation in financing and investment, (ii) employee participation in management through the acquisition of equity interest in enterprises, and to provide non-contributory benefits to employees up to a certain amount. Permanent, temporary, casual, contract, piece-rate pay, learners, and apprentices employed in the business and public sectors are all eligible to participate.
What does EPF mean?
The Employees’ Provident Funds and Miscellaneous Act, 1952, governs the primary system. Both the employee and the employer contribute 12% of the employee’s base salary and dearness allowance to the EPF.
In Sri Lanka, where can I receive EPF and ETF?
By submitting a dully filled Application for Self Member Seek for ETF e-services to the Self Employment Section at Head Office or to the nearest ETF Regional office, ETFB registered self-employed members can request log-in accounts directly from the ETFB.
Who qualifies for the EPF and ETF?
Act No. 15 of 1958 established the Employees Provident Fund (EPF). Contributions to this fund are made on a regular basis. Its goal is to assist employees in saving a portion of their monthly salary. The fund can be accessed if the employee becomes unable to work or when they retire.
Employers must send to the Central Bank every month a sum equivalent to 20% of the employee’s total wages to the Fund. The employee must contribute 8% of his or her total wages, while the employer must contribute 12% of the employee’s total earnings. Contributions should be based on the employee’s total earnings. Salary, wages or fees, cost of living allowance, and vacation pay are all included in total earnings.
Payments, food allowances, and other comparable benefits, as well as the cash worth of food provided by the employer. However, overtime pay is not included. Payments for work done within normal working hours on weekly holidays, Poya days, or public holidays should also be counted as wages for EPF contribution purposes.
From the first day of employment, an employee is eligible to join the EPF. It is the responsibility of the employer to enroll the employee in the EPF. It makes no difference what the job entails. All personnel, whether permanent, temporary, casual, shift workers, or apprentices, should be registered. Employees that are paid on a piece rate, contract basis, commission basis, job performed basis, or any other basis are eligible to join.
Starting on the first day of employment, any employer with even one employee is legally obligated to pay contributions to the Fund. Regardless of whether they are permanent, temporary, apprentices, casual, or shift workers, all employees should be registered by submitting the appropriate registration form labeled “A,” “B,” or “H.”
The following steps are required to get registration with EPF.
1. Within 14 days after hiring the first employee, the employer must complete the “D” form in duplicate and mail it under registered cover.
2. This form should be mailed to the nearest Labor Office to his place of business.
3. The Commissioner of Labor will issue a registration number to the employer as soon as possible.
Documents to be maintained by the employer
Payroll information, check information, extra allowance information, and labor registration information
iii. Proof of benefit payment (Central bank receipts, Cheque numbers, Registered post receipts etc.)
Steps to be followed to make EPF Payments
1. Assign employee EPF membership numbers in numerical order.
2. Determine each employee’s contribution (at least 8% from the employee and 12% from the employer) based on their total earnings for the month.
3. Fill out a copy of the “C” form in triplicate and mail the original copy under registered mail with a check or money order for the total monthly payments payable to Superintendent, EPF.
Important Points to Consider
When a new employee (member) is hired, the information should be entered into the “Form-C” for that month.
Contributions received without C Forms will not be credited to the employee’s account, causing problems and penalties.
Relevant monthly contributions must be received by EPF by the end of the previous month’s last working day. If this does not happen, the employer will be charged a premium based on the length of the delay.
Surcharges for failing to make a timely payment to the Employees’ Provident Fund
Employee Trust Fund
Regardless of whether an employee is permanent, temporary, trainee, casual, or shift worker, he or she is entitled to ETF from the first day of employment. Employees paid on a piece rate, on a contract basis, or on a work-for-hire basis of any kind are also eligible for membership. An amount equivalent to 3% of the employee’s gross wages must be contributed by the employer.
Steps to obtain Employee Trust Fund registration
Making donations to the ETF does not require a separate registration process. Contributions to the ETF should be made using the EPF registration number. Employers with more than 15 employees should complete Remittance Advice R1 and employers with fewer than 15 employees should complete Remittance Advice R4 and make the payments accordingly for ETF payments. If you’re paying with checks or bank drafts, make sure they’re crossed and made payable to the ETF Board. Money orders should be made payable to “Employees’ Trust Fund.” The ETF Board must receive monthly contributions by the final business day of the next month. Employers will be responsible for a surcharge if this does not happen.
In Sri Lanka, what are EPF and ETF?
Terms like Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) may fly over our heads as young folks entering the job. We fumble through our professional lives with only a hazy idea of what they are and what they entail. What’s on our thoughts is our overall take-home pay, after all, deductions are made, and we forget that in a few years, we’ll have built up a nice little nest egg.
You might think of EPF as your social security plan, and it’s a big one. According to the EPF Act, you as an employee must contribute 8% of your monthly salary to this fund, with your employer contributing another 12%.
ETF, on the other hand, is a fund administered by the Ministry of Labour and Trade Union Relations, and it is a fund to which the employer contributes (3 percent of the employee’s wage in most cases).
You can collect payments from your ex-employer, but not from where you are currently employed, if you simply change positions during the five-year term specified on the basis of marriage. “If you remove whatever amount you have accrued in your account from previous employers during this time, you would not be allowed to withdraw again unless you migrate or retire,” informed SHAMMAS AMEER, Manager – People & Culture at Capital Media Pvt Ltd.
Furthermore, when it comes to migrating, you can only claim your EPF earnings if you have been granted permanent residence. “Obtaining a work visa/permit from another country is insufficient, and you will be ineligible to receive this cash,” Shammas affirmed.
Up until your last employer, you can only claim ETF once every five years. “Until that moment, you can claim the 3% until you quit your current job.” After that, you must wait another five years before attempting a withdrawal,” Shammas explained.
What is the formula for ETF?
How to Calculate Net Asset Value The NAV of an ETF is computed by adding the fund’s assets, including any securities and cash, subtracting any liabilities, and dividing the result by the number of outstanding shares. These data elements, including the fund’s holdings, are updated on a daily basis.
Is the EPF required?
If you want to open a new EPF account, you’ll need to contact your employer. Form 11 will require you to supply all previous work details, if any, and Form 2 will require you to provide all family details or nomination details.
If you work for a company that employs 20 or more employees, you must participate in the EPF plan. You can still register under the scheme if your company has less than 20 employees. EPF registration necessitates the submission of corporate information as well as information on each of the company’s owners. On the official EPFO website, you can register for the EPF system.
What are the advantages of EPF?
- Benefits for superannuation/retirement, disability, survivor, widow (er), and children are paid on a monthly basis.
- Amount of pension based on average income over the previous 12 months and total years of employment from the date of exit.
How does the EPF function?
If you work as an employee, you contribute a portion of your salary to the EPF plan. This sum is frequently matched by your employer’s contribution. After that, the total is deposited with the Employee Provident Fund Organization (EPFO). 5,000 per month in EPF contributions as part of your income.
Can I take money out of my EPF account?
Employer and employee contributions are combined in the EPF account. Money in an EPF account, on the other hand, cannot be withdrawn at any time.
- Unlike a bank account, money from an EPF account cannot be withdrawn while employed. The Employees’ Pension Fund (EPF) is a long-term retirement savings plan. Only after retirement can the funds be withdrawn.
- In the event of an emergency, such as a medical emergency, home acquisition or building, or higher education, partial withdrawals from EPF accounts are permissible. Partially withdrawing funds is subject to restrictions based on the cause. A partial withdrawal request can be made electronically by the account holder.
- Despite the fact that the EPF corpus can only be taken after retirement, early retirement is not considered until a person reaches the age of 55. If the person is not less than 54 years old, EPFO authorizes a withdrawal of 90% of the EPF corpus one year before retirement.
- If a worker is laid off before retirement due to lock-down or retrenchment, the EPF corpus can be withdrawn.
- To withdraw funds from the EPF, the subscriber must declare unemployment.
- EPFO’s new rule allows for the withdrawal of 75% of the EPF corpus after one month of unemployment. After finding new work, the remaining 25% can be transferred to a new EPF account.
- After two months of unemployment, the old rule allowed for a 100% EPF withdrawal.
- Withdrawals from an EPF account are tax-free, but only under specified circumstances. Only if an employee contributes to the EPF account for five years in a row is he or she eligible for a tax exemption on the EPF corpus. If there is a five-year hiatus in contributions to the EPF account, the sum is taxed. The entire EPF sum will be considered taxable income for that financial year in that event.
- When an EPF corpus is prematurely withdrawn, tax is deducted at source. TDS, on the other hand, is not applied if the total amount is less than Rs.50,000. Keep in mind that if an employee submits their PAN with the application, the TDS rate is 10%. Otherwise, it’ll be 30% + tax. Form 15H/15G is a declaration form that declares that a person’s whole income is not taxable, avoiding TDS.
- Employees no longer have to wait for their employer’s permission to withdraw their EPF funds. If the employee’s UAN and Aadhaar are linked, and the employer has accepted it, it can be done directly through the EPFO. You may check your EPF withdrawal status online.