Many among us forget to transfer our Provident Fund (PF) account, after switching jobs. This carelessness may lead to issues like interest accrual stoppage, tax issues, and difficulties claiming retirement funds. Here are the potential problems of not transferring your PF after switching jobs.
Loss Of EPF Interest: If a PF account remains inactive for 3 consecutive years and no contributions are made to it, interest accrual may stop, as per the EPFO rules. This may negatively impact your savings over time.
Tax Troubles: If you close an old PF account before the completion of 5 years without transferring it, you may be subject to tax at the time of withdrawal. Withdrawals above Rs 50,000 if the PF account’s service period is less than 5 years are subject to TDS. However, transferring your PF consolidates service periods, avoiding tax liabilities and ensuring exemption benefits.
Data Mismatch: Every employee gets a Universal Account Number (UAN), but if you don’t transfer your previous PF account or share its details with your new employer, the new company might generate a separate UAN for you. This potentially leads to multiple UANs, causing issues with data matching, KYC updates, and fund claims.
Delay/Rejection In Final PF claim: If someone does not transfer PF from your previous jobs, EPFO will not be able to sum up his/her total period in service. This may cause the claim rejection or taking longer time in withdrawal of the funds after retirement or resignation. If someone changes jobs multiple times without transferring their PF, they might face difficulties at retirement, requiring additional steps like UAN linking, Form 13, and approval from old employers to get access to their entire fund.
Trouble For Your Pension
A part of the employer’s contribution to EPF also goes to EPS (Employees’ Pension Scheme). To get pension benefits under EPS, the total service must be more than 10 years. If PF is not transferred, the service period will be cut short, and you may also become ineligible for EPS benefits. Since EPS account balances aren’t visible online, it’s crucial to keep track of them and link EPS accounts through PF transfers to ensure accurate records.
How To Transfer PF?
PF transfers can be done online. Here are the simple steps to transfer it:
- Step 1: Visit EPFO’s official site.
- Step 2: Go to Online Services > One Member – One EPF Account (Transfer Request).
- Step 3: Select your old company and submit Form 13.
- Step 4: Your employer’s approval is required to complete the transfer.
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