Understanding PF Claims: What Happens to Your Pension Fund if You Resign Before 10 Years?

I need clarification. If an employee works for an organization and resigns from his job before 10 years, for example, after 8 years, when he claims for PF, will he be paid his pension fund, i.e., 8.33% of his basic pay by the company? Or will he be paid only 12% of his share, 3.67% of the company's share, and its interest?

Kindly clarify my doubt.

Thank you.

Regards,
Balamurugan. K

You can get the full PF amount with interest. If you contribute to PF continuously for 10 years of service, you will receive a Pension Scheme Certificate for the rest of the amount - 8.33%.

Regards,
Srinivas

With respect to your query, yes, the employee will be paid both PF & Pension Fund. But the clause goes like this:

Eligibility for Pension Fund

This rule is applicable up to 9 years of continuous service (assuming in your cited case it is continuous 8 years of service) as after 10 years, the employee is eligible for a pension.

There is something called Table D under which the eligibility of the pension fund is mentioned. There is a slab for each completed year of service & you get n times of your last drawn salary subject to a maximum of 6500 per month. To make it clear, let me cite an example.

Imagine the total contribution (yours + employer) is 3 lac INR out of which 2 lac is PF and 1 lac is Pension. If you withdraw your PF before 10 years (anywhere between 1 to 9 years), you get 100% of the PF amount but EPS is dependent on Table D.

Table D for Your Reference

Year of service = Proportion of wages at exit

1 = 1.02

2 = 2.05

3 = 3.1

4 = 4.18

5 = 5.28

6 = 6.4

7 = 7.54

8 = 8.7

9 = 9.88

So, EPS = 6500 * 8.7 = 56550 and not the entire 1 lac irrespective of your actual salary.

Hope this helps.

Regards,
Hiral

So, the balance amount of EPF (100,000 - 56,550) we are not eligible to receive. Could you please tell me what the EPFO department will do with our balance amount? After all, that is our savings, our money.

The table provided by Mr. Hiral is correct, but the example he gave is incorrect. Pension is deducted and deposited only on Rs 6500. If your organization is paying the full salary, the balance will go to PF and not to the pension. Therefore, the maximum pension fund that will be deposited for any individual will not exceed Rs 6500 * 8.33 = Rs 541.45. Hence, in a year, it will not exceed Rs 6497.40. For 8 years, the amount paid into the Pension account will not exceed Rs 51979.20.

According to the table, you will receive 8.7 times Rs 6500, or if your salary was lower, it will be 8.7 times the lower salary on which the pension was contributed. There are some more intricate calculations involved, and I am not completely aware of all methods. However, a person who has contributed in full for 8 years an amount equal to Rs 51979 will get Rs 56550. This means the person will receive slightly more than what was contributed, and the money is not taken by the PF Trust.

Regards,
T. Sivasankaran

Thank you very much for your valuable information. Kindly tell me at what installment our pension amount will be disbursed to us and on what basis.

Thank you.

Hi, as rightly pointed out in the earlier post, the balance amount is deposited towards the PF contribution. Here is an example to make it clear and understandable:

Example of PF Calculation

Actual Basic earned for a month = Rs. 9000

For PF calculation:
- Employee share = 9000 * 12% = Rs. 1080
- Employer share:
- EPS = 6500 * 8.33% = Rs. 541.45
- EPF = Employee Contribution - EPS = Rs. 1080 - Rs. 541.45 = Rs. 538.55
- EDLL Charges = 6500 * 0.50% = Rs. 32.5
- EDLL Admin charges = 6500 * 0.01% = Rs. 0.65
- PF Admin Charges = 9000 * 1.1% = Rs. 99

Regards,