A new employee asks what PF is and why it is deducted from their salary. How would you explain it?

What the interviewer wants to hear

• PF is a retirement savings scheme run by the EPFO
• Employee contributes a percentage of basic; employer also contributes
• Part of the employer share goes to the pension scheme
• Balance earns interest and is linked to the UAN
• Can be checked online and transferred when changing jobs

Model answer

I would explain that PF, or the provident fund, is a retirement savings scheme run by the EPFO. Every month a percentage of their basic salary, usually 12%, is deducted and put into their PF account, and the company also contributes on top. Part of the company share goes into the pension scheme and the rest into their PF account. The money earns interest every year declared by the EPFO, so it grows over time. Their account is linked to a UAN, which stays the same when they change jobs, so they should share their existing UAN if they have one and transfer old balances. They can check their passbook online. I would also mention that the deduction reduces take-home pay a little, but it is their own savings, and that withdrawals are allowed under certain conditions.

More easy Payroll Specialist questions

• Explain how you get from an employee gross salary to their net pay.
• A new employee asks why their monthly take-home is much lower than their CTC divided by 12. How do you explain it?
• Walk me through how you prepare and run a monthly payroll.
• An employee emails you saying their salary this month is wrong. How do you handle it?
• Why is data privacy so important in payroll, and what do you do to protect it?
• What do you check on payslips before they are released to employees?
• What information and steps do you need to set up a new joiner correctly in payroll?
• How would you explain the difference between a fixed allowance and a reimbursement to an employee?
• Payroll has fixed deadlines. How do you stay accurate when there is very little time?