PF Balance

An investment plan has been the key essential thing in Indian country. Employees have to register in the retirement scheme namely EPF. The scheme which works under the employee provident fund organization is set to give employee relief after retirement age. The Indian government has embraced the idea and supports full PF accounts.

Employee provident fund is funded by both employer and employees as they give 12% of the salary. These contributions are done after every payment. Companies and organizations with more than 20 workers are required to register them under the EPFO. This doesn’t leave out those who are less; the government encourages all workers to register in order to have income after retirement.

This scheme comprises of other schemes which get some share of the 12% deduction.  3.67% is given from the employee’s side and the rest 8.33% is contributed by the employer. The EPS scheme receives 8.33% and then slashed down to other schemes. This caters for medical and house allowances. The scheme also covers the family members of the employee where they he/she can take loans which are to be refunded after sometime.

Higher voluntary EPF contribution by employee

This contribution is also known as the voluntary provident fund. Here the employee can agreed to give more amount than the said 12% of rom the same salary. The amount is saved differently but earns a particular interest fee.  This is not a mandatory payment and one can stop at any moment or join the VPF scheme.

How to make withdraws from the EPF account.

EPF Contribution accounts are designed to work mostly at the retirement age. Employees are to gain the money soon as they attain the age. However, the account has several benefits as loans where one can take for emergency uses.  55 years is the legal retirement age in the Indian government. Employees who have attained the age of 54 and above have the right to get 90% of the interest. 

Those who withdraw without getting to the retirement age can do so in a period of 60 days or more. The EPF account is still useful even after the 55 age as the employee can benefit from what it offers.

Interest rates

Interest rates are calculated according to the years and the rate given by the government and EPFO.

Universal account number

This unique number is mandatory for all Indian citizens. Employees are to link the UAN and Aadhaar card.  The card/number stands in for the member ID. This means you don’t need to keep on giving details in different accounts. It can link all the accounts an EPF member holds.

What happens when one leaves one job and joins new organization?

The EPFO has ensure all details and matters are well resolved.  Employees can change from their old to new EPF account without leaving behind the amount saved. Using an official website employee needs the old or new employer to activate the UAN number and details and with this they can continue receiving the funds in the new account.

We are no longer living in those days when we used to work for a single company until retirement age. With the different job opportunities especially in the private sector, we keep moving from one company to the other in such of greener pastures and better experiences. At the same time, we keep shifting from one city to the other.

While it becomes a bit tedious to get released from one work place to the next due to the paperwork involved, it is very important to always remember the contributions of your benefit package. Although this is a mandatory contribution by any employee, it is always your right to enjoy the fruits of your sacrifice. The best thing is that you don’t need to withdraw your Provident Funds contributions simply because you are changing employers. All you need is to follow the right procedure and your funds will be transferred to the new employer’s account.

Why is it necessary to transfer PF instead of closing and opening a new one?

When changing an employer and joining a new one, an employee always has an option of closing their old Provident Fund account and opening a new one, it is advisable to take your time before making that decision. It is more advisable to Transfer PF amount of your old PF account funds to a new one. In the past, the transfer involved a lot of paperwork and so, people preferred closing their old account by withdrawing all their savings and opening a new one. However, things have now been made easier with the new Employees Provident Fund Organization portal as you can do all this at the comfort of your house.

There are very many advantages of transfer pf account savings instead of opening a new one every time you change an employer. Below are the main advantages:

• If you decide to close your account before five years have elapsed, your savings is taxed. However, if you decide to simply transfer the funds, there are no hidden charges involved and you will enjoy all your contribution and the interest in full when time for retirement comes.
• You avail partial withdrawal on your Provident Funds in case of an emergency. If your account runs for more than five years, it will be possible to withdraw partial amount for purchasing or constructing a house, for marriage or even for paying medical bills.
• Your savings earn the prevailing interest rate from the Employees Provident Funds Organization. If you continue with your contribution for a long period of time, this eventually becomes a substantial amount of money.