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EPF - Why should you transfer and not withdraw

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Author - Sanyam Jain
EPF - Why should you transfer and not withdraw

Change being the only constant; it is pretty common for one to look for a change, for a better opportunity. For instance, a person is always looking for a chance to grow in the corporate world - be it for more money or a better job profile - ideally both.

When one changes a job, it is always advised that you should transfer your EPF account and avoid withdrawing from it until you retire.

On the job change, the new employer will open a new account for the employee in EPFO, and a new Member ID will be allotted. So, an employee will have as many member IDs as the number of employers who have contributed to EPFO on behalf of the employee.

  • If an employee does not transfer this EPF account, they will end up with two separate EPF accounts. In this case, when an amount is to be withdrawn from the EPF account, one would be able to withdraw only from the current employer EPF account.
  • To withdraw from the first employer, one would have to approach the first employer offline, which we all know is cumbersome and time-consuming.
  • To save all this time and effort and to get all the amount withdrawn by filling just one single form at the time of retirement, it is advised to transfer your EPF account to your new employer every time you decide to change a job.
  • Once all your PF accounts get merged, all you need to do when withdrawing is to submit just one EPF withdrawal request for all the EPF accounts to your last employer. Else you cannot withdraw from an old EPF account online. Instead, you would have to do it offline and visit the EPFO office.

Apart from this, there are a few other reasons why you should transfer your EPF account and not withdraw:

  • Tax implication

Money under the EPF is tax-free. But, if you withdraw your EPF money before five years of contribution, your entire EPF withdrawal will be taxable. Also, the tax benefit you get under Section 80C on self contribution will be reversed. However, if you transfer your EPF to the new company, you can save this tax. Therefore, unless the situation is unavoidable, you should always try to transfer this EPF account than withdrawing from it simply.

  • Pension benefit

As we all know, EPF is a retirement fund that ensures financial security post-retirement. An EPS member becomes eligible for pension after completing ten years of contribution to his account and after attaining a superannuation age of 58 years. Therefore, even if a person retires before attaining 58 years, they will also become eligible for pension under EPS after completing ten years of contribution. Now, suppose you decide to withdraw money before 58 or before completing ten years of contribution. In that case, this Pension benefit will not be applicable for you, and you will end up losing a lot of money and, more importantly, a protected future.

Another point that one must keep in mind is that you can only withdraw from your old PF before joining a new job. Once your New employer EPF is linked, you will not be able to withdraw anything.

Now that we know why we should transfer our EPF account from an old employer to a new employer, let us see how to do the same:

  • Visit the EPFO portal and log in using your account number and password.
  • Check all the information in your account for any missing or incorrect details.
  • In case of any mistake or missing information, make sure to rectify that.
  • Make sure that your KYC is approved.
  • Check that your bank details like account number and IFSC are correct.
  • Now, click on Online Services - One Member One EPF (Transfer Request)
  • After this, you need to get your claim attested by your current or previous employer, depending upon when you decide to withdraw from this account.
  • A PIN will be generated post this, which will be sent to your registered mobile number. (Make sure that your mobile number is updated.)
  • Now, you need to submit the claim form to the selected employer.
  • After submission, the employer is required to approve this request.
  • To check your EPF transfer claim status, you need to click on Online Services - Track Claim Status.
  • After the submission of the form, your EPF account will be transferred within 2-3 weeks.
  • Finally, once your claim is successful, your UAN passbook of the old and new employer will reflect this transfer.

Whenever the need arises, you should always try to transfer your EPF account and withdraw only after your retirement because that is what the true purpose of this fund is. It is effortless to transfer this account, and you must do it at the earliest during your job change. If you wish to withdraw from this account because of some unavoidable circumstances, always remember that you can only withdraw before transferring this account to your new employer. After transfer, you will not be able to withdraw from this account.

About Author

Sanyam Jain
Highly motivated and utterly skilled, a young and zealous writer trying to follow his passion for the love of the English language. Written for different niches for over three years, now writing for the finance sector. When writing for a financial product you learn a new thing everyday.

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