Pf transfer: Most of us whenever they leave one job and join another company, often forget to transfer PF (Provident Fund) account or avoid it. However, this small negligence can lead to many problems later. Whether it is a problem of stopping interest or disturbances in claiming funds after income tax and retirement.
Let us know that if you have not transferred PF after changing the job, then what problems may have to face and what is the correct solution.
EPF may cause loss on interest
According to the EPFO rules, if a PF account remains inactive for three years, that is, there is no contribution in it, then interest stops getting interest on it. In such a situation, the money in the PF account of the old employer can gradually damage your savings.
Financial Advisor Sanjay Chaudhary says, “Not by changing the job, the compound interest on your money can be discontinued. This can make the retirement corpus smaller. In this case it is better to change the job and transfer PF account.”
Tax hassle and TDS hit
If an employee’s old PF account stops before 5 years and has not transferred it, then tax can be deducted while withdrawing it. TDS (tax deducted at source) can be imposed on extracting more than 5 years of service and more than ₹ 50,000 PF.
If the PF is transferred, then the calculation of your service is added from the date of changing the job. But this service break is considered by the PF account being separate. This affects tax exemption.
Duplicate Entry and Data Missamach in UAN
In the new EPFO system, every employee is given a universal account number (UAN). But if you have not transferred a new PF and did not give information about the old account, then the new company can generate a new UAN. In such a situation you can have two UAN. This may cause problems in the process like data matching, KYC updates and fund claims.
HR Technology Expert Meenakshi Rathi says, “Duplicate UAN can slow down your retirement process in future. The right way is to use old UAN in a new job and transfer PF immediately.”
Delay or rejection in final pf claim
If you do not transfer PF of middle jobs, EPFO will not be able to add your total service period together. After this, when you try to remove the fund after retirement or resigning, your claim may be rejected or it may take a long time.
For example, a person changed the job 3 times in 12 years, but did not transfer the first two PF accounts. Now at the time of retirement, his entire fund will not be seen in the EPFO record. They may have to undergo the process of approved, UAN linking and Form 13 of the old employer.
There may also be a problem in Pension Scheme (EPS)
A part of the contribution of the employer in the EPF also goes into the EPS (Employees’ Pension Scheme). To get the benefit of pension under EPS, the total service is more than 10 years. If PF is not transferred, your service period will break and you can also be ineligible for EPS benefits.
The balance of EPS account is not visible online, so it is necessary to keep its record and add EPS through PF transfer.
Easy process of PF transfer
Now the process of PF transfer is completely online. You can fill Form 13 by logging in from your UAN portal. For this, you should have details of both employers and the bank and KYC updated. EPFO usually transfers PF to 10–20 working days. Let’s know its step by step process.
- Log in on the official site of EPFO.
- Select Online Services> One Member – One EPF Account (Transfer Request).
- Choose an old company and submit Form 13.
- Your employer will be transferred after approval.
Also read: How does PF contribute, withdrawal and interest? What are the rules for employees and employers?