If you have an Employees’ Provident Fund (EPF) account with your current employer, you better not forget to transfer the funds to the account opened by your new employer as you switch jobs. If you don’t, you may lose out on the interest that your EPF money will get in the earlier account.
The new rule
The Employees’ Provident Fund Organisation (EPFO) decided earlier this year that it will not offer any interest on inoperative accounts. It defines inoperative accounts as those in which no contributions are made for at least three years. At the time of the decision, at least 40% of the EPF accounts were inoperative.
EPFO charges 1.1% as administration charges from the employer’s contribution. Since there is no contribution from the employer in inoperative accounts, EPFO had to bear the charges itself.
How to transfer your account
You can initiate the process of transfer as soon as you join the new organization. At the time of joining, your HR department will give you PF forms to open a new account. In the bundle you will also find a Form 13, which you need to fill in order to get the balance from your previous account transferred. You need to fill in the details such as your previous EPF number, organization and regional provident fund office. Your HR department will then fill in the details of the current organization along with your new PF number and submit it to the regional PF office, which gets in touch with your previous regional PF office to get your account transferred. Ideally, the process should take about 30 days but depending upon the backlog it may take longer. The process is pretty much the same even if you remember to transfer your account in the middle of your new job. Download the Form 13 from www.epfo.org.in or ask your HR department for one.
Withdrawal: However on retirement or while encashing your EPF account, you will need to fill form 19 and submit it to your employer or the regional PF office.
What should you do?
It is in your interest to transfer your account every time you change your job to get uninterrupted interest on your retirement corpus. EPFO has given you a generous window of three years to do that. Currently, you will earn a risk-free and tax-free rate of 9.5%. If you want your pension fund to work effectively for you, remember to transfer your account.