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.