Pension & pf provisions in a partnership firm

This query is : Resolved

ANSHU JAIN (Querist)
Follow

29 November 2017 Is pension and PF provision applicable in case of an employee employed in a partnership firm drawing salary of Rs. 11 LAKHS , where the firm has not employed 10 employee.?
Please state the provision.

ND (Expert)
Follow

29 November 2017 PF & Pension provisions are not applicable in case number of employees are less than 10 in an organization. The status of organization is immaterial. In case all the employees are drawing salary of more than Rs.15,000 p.m and number of employees are more than 10, even then the organization is required to get itself registered only and is not required to contribute PF. In that case very nominal annual charges are to be paid and nothing else is to be done.

Message likes : 1 times

ANSHU JAIN

ANSHU JAIN (Querist)
Follow

02 December 2017 what about pension? can u quote me the sections please?

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

10 August 2024 ### **Pension and Provident Fund Provisions for Employees in a Partnership Firm**

#### **Provident Fund (PF):**

1. **Applicability of Provident Fund:**
- **Employees’ Provident Fund & Miscellaneous Provisions Act, 1952:** Under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, provident fund provisions apply to establishments that employ 20 or more employees.
- **Section 1(3)(b) of the Act:** This section states that the Act applies to every establishment which has 20 or more persons employed.

2. **Partnership Firm Specifics:**
- If a partnership firm employs fewer than 20 employees, it is not legally required to comply with the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
- In your case, where the firm has fewer than 10 employees, it is not mandatory to provide for the Employees’ Provident Fund (EPF) under this Act.

3. **Voluntary PF Contribution:**
- However, even if not legally mandated, the firm can voluntarily opt to create a provident fund scheme for its employees.

#### **Pension:**

1. **Pension Provision:**
- **Employees’ Pension Scheme (EPS), 1995:** This scheme is part of the Employees’ Provident Fund Organization (EPFO) and applies to employees who are covered under the Provident Fund Act.
- **Section 6A of the Act:** Provides for the Employees’ Pension Scheme. This scheme is applicable if the firm is covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
- **Applicability:** If a partnership firm is not covered under the EPF Act (due to having fewer than 20 employees), the Employees’ Pension Scheme (EPS) provisions will not apply.

2. **Pension Contributions in Small Firms:**
- For firms not covered under the EPF Act (i.e., with fewer than 20 employees), there is no mandatory requirement to contribute to EPS.
- Pension provisions under EPS are linked to the EPF and are not applicable to firms that are not covered by the EPF Act.

#### **Summary:**

- **Provident Fund (PF):** Mandatory if the firm employs 20 or more employees. In your case, with fewer than 10 employees, it is not a statutory requirement.
- **Pension (EPS):** Also linked to the PF provisions. Therefore, not applicable if the firm is not covered under the EPF Act.

**Key Sections:**

- **Employees’ Provident Funds and Miscellaneous Provisions Act, 1952:**
- **Section 1(3)(b):** Defines applicability based on the number of employees.
- **Section 6A:** Provides for the Employees’ Pension Scheme.

**Further Steps:**

- **Voluntary Scheme:** If desired, a partnership firm can establish a voluntary provident fund and pension scheme even if not legally required.
- **Consultation:** For detailed compliance and setting up such schemes, consulting with a legal expert or an EPF consultant can be beneficial.

This approach ensures clarity on statutory obligations and voluntary options for partnership firms regarding employee benefits.