Hi, 2 queries with regard to the FPF (family pension fund) contribution made by employer to the EPFO :

1) I understand FPF can be withdrawn only if the employee has completed min. 6 months service with 1 organisation. What if the service is short of

6 months, by 2-3 days ? Can FPF be withdrawn then ?

2) I am told by EPFO office that upon withdrawal of FPF, the employee gets ONLY a certain percentage of the FPF contributed, depending on the extent of service. This is to say that if my 6 months FPF accumulation is say 10000 & i withdraw, i will not get full 10000 but only a certain % of Rs. 10000 ? Is this right ? If yes, what's the logic behind deduction ?

3) Now that the FPF contribution stands upwardly revised at Rs. 1250 instead of 540 earlier, it is essential that it earns some interest. What is the idea behind NOT giving any interest on FPF contribution ?

Early response requested. I have been following ABBASIT's expert views in PF matters. I look forward to his opion also, on the above.



From India, Ahmedabad
Dear Nirav,
1) If your service is less than 6 months, it can be transferred to add up with future service.
2) The withdrawal benefit for 1 to 9 years is 1.02, 1.99, 2.98, 3.99, 5.02, 6.07, 7.13, 8.22 & 9.33 respectively multiplied by salary. That means for except 2, 3 & 4 years, you will get interest. Regarding logic, it is to be asked to EPFO as the scheme is stream lined by them.
3) Same answer in compliance with answer No. 2

From India, Bangalore
Hello Nirav,

Kindly find the answers to your queries.

1) An employee can withdraw Pension only if he has served in an organization for a minimum of 6 months. There is no eligibility if the period is less than 6 month. However, it is also necessary that the organization has remitted the pension dues of the employee to the respective PF Office for this period.

2) You are right. The amount of Pension that you get on withdrawal depends upon your period of service and not on the monthly contribution. It's a bit difficult to explain the calculation here, but I'll run you through the general fundamental principle behind it's calculation. For computing the eligible pension amount (in case of withdrawal), there is a "factor" which the PF Office takes into consideration and it is multiplied by the EPS wages. However, the factor depends upon number of months you have completed working in an organization.

Accordingly, there are people who stands at an advantage and there are people who are at less advantage. In short, your pension amount is not dependent on your contribution once your EPS wages exceeds INR 6500 (INR 15000 currently).

3) So, the total pension amount is dependent upon the extent of service. It is derived through a formula and not on the total contribution made. Hence, there is no rational behind questioning why there is no interest on it.

Hope, I have answered your queries to your satisfaction !

(To avail the maximum benefit of pension through withdrawal, employees who plan to change jobs should leave an organization only after completing 18 month or 30 months or 42 months and so on adding 12).

Cheers, A.B.

From India, Mumbai
Hello Abbas,
Sorry, I just saw your message after posting mine.
The factor (or the withdrawal benefit factor) has been changed or rather reduced currently from 1.02 to 0.99 and so on. This factor and the pension amount computation has nothing to do with the interest rates.

From India, Mumbai
Dear A.B
The difference in table D didn't come to my notice till date. Thank you for updating. But the second part of your answer is mistaken. It has something to do with interest rates.
One month EPS contribution is 8.33%, which is equivalent to 1/12. Means for 12 months, EPS contribution will be one month salary. In return EPFO will give 1.02.

From India, Bangalore
Thanks for your valued inputs & time. I guess, a few things remain unanswered by the very nature of Policy-makers. There's gonna be such a large pool of people who don't know or withdraw FPFs (thru short-tenured services).
i guess, i'll prefer to continue this thread with some addendum questions, after this mar. 31st as my position will be clear by then.
Thanks again,

From India, Ahmedabad
Hello Abbas, Whatever may be interest rates, the pension amount is not related to it. The factor is decided by the EPFO and is dependent upon the length of service. Regards, A.B.
From India, Mumbai
No doubt. But from Table D we can understand whether we will get more than our contribution or not in general. For 5, 6, 7,8 & 9 years our contributions are 5, 6, 7, 8 & 9 times and withdrawal benefits are 5.02, 6.07, 7.13, 8.22 & 9.33 times respectively.

From India, Bangalore

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