Should I Withdraw My Provident Fund Accumulations Before A Part Of It Goes Into The Pension Scheme? - CiteHR
Abbasiti
Assistant Engineer, Indian Telephone Industries,
Loginmiracle
Consultant & G.m.
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1) Since 1/4/2004, in my present job, I have been contributing 50% and for last 2 years 100% (of Rs.6,500) per month to the Provident Fund Scheme and the Employer has been contributing Rs.780 per month. The latest balance in my account is about Rs.3.5 lakhs employees contribution and Rs.58,000 employer's contribution.

2) I will be resigning from this company and shall take up the next job after a gap of 2 months.

Hence, I have the possibility of withdrawing both employees plus employer's contribution after 2 months. If I do not withdraw, in another year (after completion of about 10 years), a significant part of the accumulations in my account will go into the Pension Scheme, where the returns are very low.

3) I am 51 years old, unmarried, with an 82-year old mother, but do not require funds for any emergency presently.

Dear Sirs, kindly offer your valuable guidance if, in my case, I should withdraw the provident fund accumulations or transfer the balance amount to the Provident Fund account in my new job, even if it means opting for the Pension Scheme. I am unable to make up my mind.
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Kapil, My suggestion is to transfer your PF account rather than withdrawing. The returns wiil be good and you will get pension. Regards, Ravi.PDL
Dear Kapil,
Seasons greetings to all.
I endorse Ravi Pdl's views. More so you are just 51 and almost nearing the qualifying 58 yrs. for a fat pension. Therefore try to transfer your PF A/c. to your new employer as and when you join them. Also you said you don't have any emergency commitments and it's prudent to continue especially you stand to gain substantially with your new employer as a continuing PF subscriber otherwise you'll lose new employer's contribution (might be ltd.to 6500/-) Pl.examine in detail the pros and cons of your thinking little more.
And, pl.explain little more about the later part of your pt.No.2.
kumar.s.
Mr. Kumar, my contribution to provident fund is Rs.6,500 per month. Employer is contributing only 12% of Rs. 6,500, which comes to Rs. 780 per month. Of this Rs.780, Rs.541 goes to a separate "pension scheme". So, in 20 years, the amount which will go to this scheme is Rs.541*12*20 = Rs.1,29,840. No interest is paid on this Rs.1,29,840. After age 58, one gets very nominal pension per month of about Rs.1,500-1,800. The principal amount of Rs.1,29,840 is never repaid. The only advantage is that the person gets this small pension of about Rs.1,500-1,800 as long as he is alive.

If the individual withdraws his accumulation in the provident fund account before completion of 10 years, he is eligible to get his own contribution plus his employer's contribution (which is not eligible for "pension scheme" if 10 years are not complete). He gets both employee's contribution plus employer's contribution with interest. Hence, many people withdraw the total corpus before the provident fund account becomes the provident fund account becomes 10 years old. The disadvantage in this case is that the person is not eligible for any pension and hence some amount of "social security" is sacrificed.

Dear Sir, I have tried my best to explain the scheme as I understood and now look forward and will be thankful to receive your opinion and guidance whether to withdraw the provident fund corpus now or transfer the same to my new provident fund account in my new job.
Dear Kapil,

You have analysed your situation very well. In-fact I don't really see the dilemma!

If you withdraw the entire fund from the current account and make a fixed deposit in a bank, or deposit in a PPF account you will get good returns as against the small pension on retirement. Over the next seven years this amount should double to around eight lacs.

You are obviously moving to a better paying job, so you will be able to retain the ability to contribute maximum to your PF account even there. In another 6 - 7 years you should be able to save around six lac rupees. This amount can again be withdrawn and invested.

The total of say 14 lacs by the time you reach 58 years of age and still serving! Special FDs with any nationalised bank should give you a return of 9% PA, Say approx 1.25 lacs PA. Even assuming that your income at that stage is taxable, if you deduct IT at 30% it would leave you with over Rs.80,000/- per year. That sounds reasonable.

Please bear in mind that I have not used any accurate means of calculation, so if I am a little off in the calculations, please forgive me.

Good luck to you.

Colonel Gahlot

'TRURECRUIT'

09810081197
Hi,
Colonol Gahlot's suggestion seems quite reasonable and hence I appreciate it and also would like to tell you that you can earn Interest on your money @ 9% p.a in Fixed Deposit in Syndicate Bank or even you can seek help of any financial adviser. The second option is to purchase Gold and keep it in bank Locker. Certainly you will get good returns. --- Raj.
Suggest u continue your membership with PF through your prospective employer.U can transfer your funds available in your account currently to your proposed new a/c rgds sivaraman
Dear Kapil,
Withdrawal of PF will not affect pension. Also you have no roll on pension fund. If you have a service of 9 years and six months, you are eligibile for monthly pension and no other alternative. For those have less service will not get pension, but may avail one time withdrawal benefit.
Abbas.P.S
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