Four issues you may face if you switched jobs but did not transfer your provident fund
NEW DELHI
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When we switch jobs, we are told to transfer our employee provident fund (EPF) to the new employer. This requires filling out Form 13. Some people ignore this, and in some cases, it doesn't happen even after they apply for it.
We have compiled five reasons why you must transfer your EPF to avoid challenges that you may face later.
Partial withdrawal
You may want to withdraw some of your PF balance for home purchase, home loan repayment, marriage or self or children's education. If your previous accounts haven't been merged with the latest and you still apply for partial withdrawal, the Employees' Provident Fund Organisation (EPFO) will only consider the balance in your existing PF account to determine the permissible withdrawal limit. This may drastically reduce your withdrawal eligibility.
Also Read: The EPFO's ATM plan is good but it must resolve its pension muddle first
For example, your existing account only has ₹1 lakh balance, while your previous two accounts have ₹5 lakh and ₹10 lakh. One can withdraw up to 50% in the event of marriage. You could have withdrawn up to ₹8 lakh (50% of ₹1 lakh + ₹5 lakh + ₹10 lakh), had you merged the three accounts. If unmerged, you will only be eligible to withdraw ₹50,000 (50% of ₹1 lakh).
Issues in final settlement
Suppose you leave your full-time job after working at several places. You now want to close your PF account for good. The EPFO allows a 100% withdrawal two months after the exit date if you don't join formal employment elsewhere. You apply for it, but your claim is rejected. Why did the claim get rejected? You wonder! This is because a full and final settlement cannot happen unless previous PF accounts are merged. You must merge all your previous PF accounts into the last account to be eligible for a 100% withdrawal.
Multiple UANs
If you do not raise a transfer request and your employer assumes you have never been a PF member before, it might create a new UAN (universal account number) for you. "Having multiple UANs can complicate KYC verification, claims processing, and future employment linking with the PF account," said Anurag Jain, co-founder/partner at ByTheBook Consulting LLP.
Break in EPS continuity
Without a PF transfer, your service duration across jobs doesn't get consolidated. This affects pension eligibility as EPS requires a minimum of 10 years of continuous service. So even if you may have worked for over 10 years, you will not be eligible for pension benefits unless your previous service history gets merged.
Also Read: Two ways for the EPFO to give itself an image boost
It is also important to understand the concept of exempt and non-exempt employers. Employers maintaining an exempt PF trust manage PF themselves, while the EPFO does it for non-exempt employers. The EPS is handled only by the EPFO in both cases. So, if you have worked with an exempt employer, the withdrawal is possible even if your previous accounts are not merged. If withdrawn, it complicates your PF history because the EPF has been released, but the EPS has not been transferred. Transferring the EPS in such a situation involves an offline process.
Always transfer your PF when you switch jobs. Whether it has happened or not, keep track of it online on the EPFO member portal. Ignoring it will complicate your PF and EPS service history. Notably, the EPFO has implemented auto-transfer of PF on change of employment if both employers are non-exempt, provided your UAN is fully KYC compliant.
Also Read: EPFO alert! How to avoid, deal with rejections, delays
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