Most of us plan to retire after the age of 60. But if we stopped working, where would all the money come from?
Here comes the role of the provident fund or EPF.
An employee can avail this fund once they retire and live a comfortable life. But sometimes earlier in life, due to emergencies, we might need that fund urgently. A similar instance occurs when we plan to switch jobs.
In such cases, we need to know how to transfer PF amount to bank account.
When salaried workers retire, a provident fund (PF), often known as a retirement fund, provides a lump sum payout.
The provident fund can alternatively be used to provide ongoing payments when an employee switches a job.
Usually, the organisations where they are employed deduct a particular sum from their income every month and transfer the amount to the EPFO or the Employees Provident Fund Organizations.
An employee is registered for PF purposes once they begin working for one of the PF-registered organisations.
Particularly in the beginning or middle of a career, it is quite common for individuals to change their job.
In these situations, the employee has two choices.
If an employee is on leave for more than 60 days, the employer may withhold the employee's contribution plus interest; or
Send the remaining amount to your employer.
It is always preferable to shift the PF balance rather than withdraw it so as to keep your retirement fund intact.
From a tax planning perspective, this is also wise because there is a tax associated with PF withdrawals made before five years of continuous service.
Listed below are the requirements and definite processes regarding how to transfer PF amount to bank account.
The Employees' Provident Fund Organization (EPFO) has taken several steps to make it easier for both employers and employees to use EPF accounts.
The transfer and withdrawal of PF, typically laborious and time-consuming, are two processes on which the EPFO is working. The processes are becoming computerized to keep up with technological development.
To consolidate the various Member IDs that various employers may have given a person, EPFO established the Universal Account Number (UAN).
A member's various EPF Accounts (Member IDs) can be linked together via the UAN.
If you have been wondering how to transfer PF amount from previous company, then it might already occur to you that the above processes have made the job seamless.
To switch the EPF amount from an old account to a new one, you must fulfil the requirements listed below -
The employee must have an active UAN.
The EPF account holder's mobile number used for activation must also work.
Aadhaar should be connected to the EPF account.
On the EPF portal, it should be noted when you left the previous company and when you joined the new company.
The employee must link their bank account to the EPF portal, and the employer must confirm this.
EPFO only permits account transfers once per Member ID.
Here’s how to transfer PF amount from previous company by following some simple steps-
Use your UAN and password to access the EPFO members' portal.
To create an online transfer request, pick the "Transfer Request" option under the "Online Services" tab on the homepage's main menu.
A screen displaying all of your personal information will appear after you select the "Transfer Request" link.
Make sure all of your personal information, including your EPF number, birth date, and membership date, is accurate. The claim won't be processed if it's not.
After you have confirmed your personal information, enter the information for your prior employer.
Before that, you must decide whether you want to certify your claim form through your current employer or your old job.
After this, an OTP will be delivered to your registered mobile number.
The request will be sent and a filled-out online form generated once you validate your identity by providing the OTP.
The form must be signed before being forwarded to your current or prior employer.
A notice about the EPF transfer request will also be sent to the employer online. The employer can electronically transmit the request to the EPFO office, where it will be processed after your employment information has been verified.
You may check the progress of your EPF transfer claim through the 'Track Claim Status' option, which would be found underneath the 'Online Services' menu after you make the online request.
Since the entire process of transferring your PF amount from the previous company to the account of your present company has become digitised, employees don’t have to worry about receiving their hard-earned money while switching jobs.
The most common PF in India is an employee provident fund, usually referred to as a recognized provident fund. Salient features include -
Every company or firm with more than 20 workers must provide the staff retirement benefits required and make PF contributions.
According to the latest budget, the EPF deposits incur higher interest rates of 8.1%.
The finest feature of EPF is that the company matches the employee's contribution in total, and the majority of the money is distributed upon retirement.
The remainder is given as a pension in installments.
Only upon retirement does EPF mature, and if the retiree has been employed by the firm for more than five years, the money they get is tax-free.
Recent regulations require that the employee pay taxes on interest on deposits that total more than INR 3 lakhs annually.
Upon retirement, the provident fund offers people lucrative investing options.
They can use the one-time infusion of cash to buy a new house, start a new business, support their dependents' education, cover unexpected medical costs, or just save in mutual funds.
Since the provident fund is one of the most trusted financial services for working individuals in India to receive retirement cover or ongoing payments upon leaving their work, it is essential for them to understand how to transfer PF amount to bank account.
Switching jobs basically implies that an employee is starting fresh at a new organization. Therefore, they look forward eagerly to the saved corpus at their previous organization.
Some even worry that their previous organization doesn’t rob them of receiving their due PF amounts. That is why they should be well aware of how to transfer PF amount from previous company to their present salary or savings accounts.
Yes, after signing the claim, you must print a copy of it and present it to the employer.
The 'Views the status of transfer claims' link under the tab 'CLAIM' would show you the claim's most recent status.
The following papers must be submitted to accomplish the EPF transfer.
The following are the disadvantages of PF.
1. Lack of liquidity: Prior to retiring or after two months of being unemployed, you cannot withdraw money from your Provident Fund investments. This money cannot be used at will, with the exception of emergencies. Therefore, people whose monthly costs equal their income may consider raising their take-home pay by forgoing PF contributions.
2. Doubtful employer activities: Check the company's activities and financial standing before joining to see if they have a history of providing Provident Fund contributions. Due to financial difficulties, employers may occasionally fail to make contributions without the employee's knowledge. Receiving payment in cash can be a better choice if you have doubts about your company's capacity to fulfill its PF contribution commitments.
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