Should I Withdraw My PF After 5 Years of Service or Keep It? Seeking Advice on Full Amount and Pension Fund

Hi, I have recently changed my company and want to withdraw my PF as I have more than 5 years of continuous service. Therefore, I request your advice on whether withdrawing is better or holding the PF account. Also, I would like to know if I will receive the full amount upon withdrawal or if they will retain any money for the pension fund. Please advise.

Thanks,
Girish

PF and EPS Withdrawal Guidance

PF and EPS are separate accounts. If you are in urgent need of money, you can withdraw both amounts after two months from the relieving date by applying with Form 19 and Form 10C, respectively. However, it is advisable to transfer the EPF and EPS by submitting a single Form 13 to the previous RPFC office through your current employer.

Regards,
Abbas.P.S

Dear Sir, I sincerely thank you for your kind response to my post.

EPF Transfer and Benefits

Firstly, if I continue with the EPF by transferring via Form 13(R), how will I benefit? Since I will receive the same amount as a pension after retirement, which I am currently receiving, the only difference is the interest, which is 8.5%. Compared to the market, it is very low.

Government Contributions to Pension

Secondly, apart from interest, will any amount be contributed by the government for the pension (similar to government employees who receive regular pension revisions)?

Tax Exemption on Withdrawn PF Amount

Thirdly, I heard that after 5 years, the withdrawn PF amount is exempted from income tax. I have a previous PF account from my earlier company that was not transferred due to technical issues for more than 5 years. Since I haven't made continuous contributions to that PF account, will it be taxed or not?

Withdrawing PF During Service

Fourthly, in case a person needs money and wants to withdraw the PF amount during their service (neither retired nor resigned), is there any way to withdraw the money other than through a loan (as the loan process is generally lengthy)?

Please help me.

Regards,
Girish

Now the interest rate is 9.5%, which I feel is reasonable compared to the market rate. If withdrawal is more beneficial, you can proceed accordingly.

In addition to the employer contribution of 8.33%, the Central Government contributes a nominal amount at 1.16%.

I believe it will not affect income tax. However, please confirm this.

While in service, there is no provision to withdraw PF other than through a loan.

Regards,
Abbas.P.S

Dear Sir, Thank you again for your valuable reply.

Interest Rate of 9.5%

When is the interest rate of 9.5% in effect? I noticed on my PF Slip that the interest rate was shown as 8.5% until 2009-10. I believe it is effective from 01.04.2010.

Pension Eligibility and Options

In case I exceed the minimum years required to be eligible for a pension, which is 10 years, can I avail of the pension before the retirement period or before reaching 58 years of age?

For example, if I have held a PF account for 10 years, resigned from my job, and joined another company, can I opt for the pension from my previous PF account instead of transferring the amount to my new PF account? Additionally, can I open a new PF account in the new company? Are there any possibilities, and is it worth considering?

Please advise.

Regards,
Girish

My advice is always to keep your PF as it is without touching it unless there is a dire emergency. It is not just about interest rates but also about saving. Usually, you will see the benefits only after a sizeable amount is accumulated in your PF account.

Regards,
Dipak

May I know what is the maximum limit of PF deduction? Also, I have a confusion regarding the PF transfer form 13 or 13R.

Regards,
Reje

To avail of the pension before reaching the age of 58 years, there are certain conditions to consider:

1. The applicant should not be in a PF applicable service.
2. For individuals below the age of 58 years, 4% will be deducted from the pensionable amount for each year.
3. The minimum age to avail the reduced pension is 50 years.

Furthermore, EPFO will not review the pension once released (unless it's due to their mistake) or provide more than one pension from EPS. Therefore, if you are presently not in service, you may avail the pension from the age of 50 years onwards.

Abbas.P.S