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UPDATE: Now you can apply for transfer of Provident Fund and Pension online! Check the appropriate section below.
When you change your job, you need to transfer your accumulated Provident Fund and Pension as well. Most people already know this, but are so daunted by the complex-sounding procedure and imagined difficulties that they prefer to withdraw it instead or, worse, treat it as a lost investment and forget about it.
Of course, one might ask why, in this day and age, do we need to have this ancient system of transferring our Provident Fund and Pension each time we change jobs. Why can’t we instead have a unique account number that, once allocated, remains constant for our entire working life?
While moving to a unique account number is a much awaited and long pending reform, for the time being we have to live with the existing system. That said, I must add that transferring PF and Pension accounts is not as complicated as most people imagine it to be. It just requires a bit of diligence on our part. Not to mention, there are several ways to seek grievance redressal if the need arises.
But first, let’s begin by understanding what Provident Fund and Pension are and why they are needed.
What is Provident Fund and Pension?
Employees Provident Fund (also called EPF or PF in short) and Employees Pension Scheme (also called EPS or simply Pension) are mandatory long term savings schemes established by the Government of India in which a certain portion of your salary must be deposited each month. The purpose of this is to ensure a cushion of savings which can be availed in hard times, and to provide a monthly Pension income after retirement.
As per Government rules, 12% of an employee’s monthly basic salary (not gross salary or CTC) plus dearness allowance (if given) must be deposited as PF every month. Likewise, the employer has to make a matching contribution of 12% of basic salary + DA. However, the employer’s 12% contribution does not fully go towards your PF. It is split into two parts of 3.67% and 8.33% respectively – the former goes to your PF account and the latter to the Pension account (subject to a maximum of Rs. 1250 per month).
To illustrate this, let’s take an example of an employee whose basic salary + DA is Rs. 20,000 per month:
|Basic salary + dearness allowance (A)||Rs. 20,000 per month|
|Employee PF contribution @ 12% of basic + DA (B)||Rs. 20,000 x 12% = Rs. 2,400 per month|
|Employer PF contribution @ 12% of basic + DA (C)||Rs. 20,000 x 12% = Rs. 2,400 per month|
|PF portion of employer contribution @ 3.67% of basic + DA (D)||Rs. 20,000 x 3.67% = Rs. 734 per month|
|Pension portion of employer contribution @ 8.33% of basic + DA (E)||Rs. 20,000 x 8.33% = Rs. 1666 per month|
|Actual Pension portion of employer contribution (subject to maximum of Rs. 1250, rest goes back to PF contribution) (F)||Rs. 1,250 per month|
|Actual PF portion of employer contribution (including excess balance from Pension portion) (G)||Rs. 734 + (Rs. 1666 – Rs. 1,250) = Rs. 1,150 per month|
|Total PF contribution (employee + employer) (B + G)||Rs. 2,400 + Rs. 1,150 = Rs. 3,550 per month|
|Total Pension contribution (employer only) (F)||Rs. 1,250 per month|
Note that the employee and employer contributions are calculated on your basic salary, but are not deducted from it. They are paid over and above your basic salary as part of your total remuneration package (CTC).
Who Maintains my PF and Pension Accounts?
PF and Pension accounts are normally maintained by the Employees Provident Fund Organization (EPFO), which falls under the Ministry of Labor and Employment, Government of India.
Apart from the EPFO, some large private firms are also allowed to maintain their own PF trusts to allow them to process employees’ claims more quickly. However, these have to be registered with the Regional Provident Fund Office (RPFO) and are subject to the same rules and regulations as the EPFO itself.
Is there an Account Number for my PF and Pension Accounts?
Every PF account has a number associated with it. It is in the format XY/12345/123456, where XY is the region or state code (e.g. KN for Karnataka), 12345 is the establishment code and 123456 is the account number. It can also be in the new format, which is XY/ABC/12345/123/123456, where XY and ABC are the region and office code respectively (e.g. BG/BNG for Bangalore), 12345 is the establishment code as before, 123 is the extension (usually 000) and 123456 is the account number as before.
An employee whose PF account is maintained with the EPFO will be given an account number in one of the above formats. This account number is the same for both the PF and Pension accounts, although they are maintained separately. Your PF account number will usually be displayed on your monthly pay slip.
NOTE: In case of companies with their own PF trusts, only the PF account is maintained by the trust, while the Pension account is still maintained by the EPFO. In such cases, there are two account numbers allotted to the employee, one each for the PF and Pension accounts. Both numbers will however have the same format as described above.
Should I Transfer or Withdraw my PF and Pension when Changing Jobs?
It is recommended to transfer your PF and Pension instead of withdrawing it on change of jobs, for financial and other reasons, some of which are:
- Your PF contribution, if withdrawn before completion of five years of service, is taxable
- The money in your PF account earns tax-free interest income at high rates of interest, whereas if you withdraw it and invest it elsewhere, the interest rates are usually lower and interest income and maturity gains are often taxable
- You lose out on Pension income accruing to you after a minimum of 10 years of service
However, if you are no longer employed, you are legitimately eligible to withdraw your PF and Pension funds, subject to the following caveats:
- You can only apply for PF withdrawal after a minimum of 60 days after leaving service. There is no maximum time limit, however.
- You are eligible to withdraw Pension only if you have worked for a minimum of 180 days in the previous establishment. Otherwise, the Pension contribution stands forfeited.
- You have the option of withdrawing your Pension funds only if you have been working for 10 years or less. If you have been working for longer than that, you will instead receive a Scheme Certificate, which you can surrender at the age of 50 years and above to receive a monthly pension.
Usually, a transfer takes much longer than a withdrawal, which is why many choose to withdraw their PF and Pension rather than transfer it. But ideally, you must transfer your PF and Pension when you change your job. You should do so within three years of leaving your previous organization because, after that, your old PF account will be marked as inactive and stops earning interest.
Procedure to Transfer PF and Pension
To transfer your PF and Pension to your new account, you need to fill and submit Form 13 (Revised) to your present company’s finance department.
You must mention your previous and current PF account numbers on the Form 13.
Note that there is no separate form for Pension transfer. Pension is transferred along with the PF itself. However, if your previous PF account was maintained by a trust, then you will need to submit two copies of Form 13, one each with the PF and Pension account numbers respectively (since they are different in this case).
Your company will forward the Form 13(s) to your previous employer, who will then forward it to the concerned PF office after verification of particulars. If your previous company had its own trust, they will send a cheque for lump sum transfer of PF, along with a document known as Annexure K.
Procedure to Withdraw PF and Pension
To withdraw your PF and Pension after leaving service, you need to fill and submit two forms. To withdraw PF, use Form 19. To withdraw Pension, use Form 10C. As mentioned earlier, withdrawal of Pension is subject to certain restrictions.
You must submit these forms to your previous employer along with a cancelled cheque leaf of your bank account in which you wish to receive the payment.
You can also directly submit the forms to the concerned PF office, but you will need to collect a document known as Form 3A from your previous employer and submit along with your forms. There is usually no harassment here – just don’t forget to collect the receipt of submission for your reference.
Instructions to Apply
1. You can download the forms specified above (and instructions to fill them) here: http://www.epfindia.com/site_en/Downloads.php?id=sm8_index#Claim%20Form
2. To fill up the various forms, you will need the following details:
- PF account number of old company (you will get this from your pay slip)
- Pension account number of old company (same as PF account number)
- Date of joining and leaving previous establishment
- Date of joining present establishment (in case of transfer)
- Bank account where you wish to receive the funds (in case of withdrawal)
- Name and address of the PF office to which your previous company was depositing PF (you can get it by entering your old PF account number here: http://search.epfoservices.in/est_search.php)
3. If applying for withdrawal, the following documents also need to be enclosed along with Form 19 and Form 10C:
- Form 3A from your previous employer. This document basically lists the details of contribution towards PF and Pension by the previous employer. This will be given by your previous employer and must be submitted in original with the application. It will be in this format: http://www.epfindia.com/site_docs/PDFs/Downloads_PDFs/Form3A.pdf.
- Cancelled cheque leaf of your bank account in which you wish to receive the money.
4. There is no need to fill up the “Advance Stamped Receipt” section of Form 10C and Form 19, or attach any stamp of Re. 1/-. You can leave the section blank.
5. Provide your mobile phone number and email ID on top of all the forms on the first page. This will allow the PF office to get in touch in case of any issues.
Checking your Claim Status
You can check your claim status (transfer or withdrawal) here: http://www.epfindia.com/site_en/KYCS.php
Select the state where your previous establishment is located, select the PF office applicable and enter your PF account number to retrieve the claim status.
Reasons for Rejection
If your PF or Pension transfer or withdrawal application is rejected, you will be sent a letter specifying the reason. However, this letter can take quite some time to arrive, and the URL for checking claim status does not specify the reason for rejection.
So, in the meanwhile, you can refer to this document to understand the common reasons for rejection: https://docs.google.com/open?id=0B3fAqJpOwcyxSksyeTNfci13LTA
In case of any grievances or lack of progress on your application, you can lodge a grievance online here: http://epfigms.gov.in/
However, grievance redressal through this mechanism takes a long time, and it is much quicker to get information by filing a RTI application instead.
The following links have useful information on how to file a RTI for getting status of PF claim:
UPDATE: Apply for PF and Pension Transfer Online
The EPFO has introduced an online EPF and EPS transfer facility for employees. You can now submit a transfer request online at this site: http://memberclaims.epfoservices.in/
Note that you will need to register first. You can also check the status of your transfer request via the same link.
- Facts about EPF and EPS: http://www.jagoinvestor.com/2012/05/epf-facts-employee-providend-fund.html
- EPF withdawal for personal reasons: http://profit.ndtv.com/news/your-money/article-want-to-withdraw-from-your-epf-account-here-are-the-details-314635
- Online EPF and EPS transfer portal: http://memberclaims.epfoservices.in/
- EPF and EPS transfer/withdrawal forms: http://www.epfindia.com/site_en/Downloads.php?id=sm8_index#Claim%20Form
- PF transfer/withdrawal claim status: http://www.epfindia.com/site_en/KYCS.php