Are you planning to switch your job? If yes, then you must know about the importance of transferring your EPF account. EPF, or employee provident fund, is a retirement savings scheme that is mandatory for all salaried employees in India.
It allows employees to accumulate savings over the course of their working life, which they can use as a source of income after retirement. However, when an employee switches jobs, they must ensure that their PF account is transferred to their new employer.
What is an EPF account?
An EPF account is a type of retirement savings account created for employees who peridically contribute a certain percentage of their salary towards it. In addition, employers are also required to contribute to their employee's PF accounts.
The funds in the account are managed by the Employees' Provident Fund Organization (EPFO), which invests it in various financial instruments. The accumulated amount can be withdrawn by the employee at the time of retirement or in case of an emergency.
What happens if you don't transfer your EPF account while switching jobs?
If you don't transfer your EPF account while switching jobs, your old EPF account continues to earn EPF interest rate. However, due to the non-contribution in the account, the interest earned in the EPF account becomes taxable.
This can significantly reduce the overall amount that an employee receives at the time of retirement. Furthermore, non-transfer of the EPF account affects the continuity of the PF contribution, which may finally dent the pension benefit of the EPF account holder.
How to transfer your EPF account?
- Log in to your EPF account on the official website of the EPFO using your UAN and password.
- Navigate to the ‘Online Services’ section and select ‘One Member – One EPF Account (Transfer Request)’.
- Review your personal information and present PF account details thoroughly.
- Click ‘Get Details’ to access the PF account details of your previous employment.
- Choose your previous or current employer to attest the claim form depending on the availability of an authorized signatory holding DSC.
- Enter your Member ID or UAN and click ‘Get OTP’.
- Then, submit the OTP to authenticate your identity and generate an online PF transfer request form that must be self-attested and submitted in PDF format to your selected employer.
- Once the employer approves the transfer request digitally, the PF is transferred to the new account with the current employer, and a tracking ID is generated to monitor the application online.
Why it is important to transfer your EPF account?
Transferring your EPF account while switching jobs has several benefits. Firstly, it helps in maintaining the continuity of contribution, which ensures that the accumulated balance in your EPF account remains tax-free.
Secondly, it ensures that the interest earned on your EPF account continues to be tax-free. Thirdly, it helps in avoiding any discrepancies in the account due to multiple accounts. In the end, transferring the EPF account is a simple process, and it can be done online, which saves time and effort.