Can Employees Opt Out of PF Contributions After Joining a New Company? Seeking Advice

I have a doubt regarding PF contributions. One of our employees worked for a government organization and opted for PF while working there. She joined our company in 2009 and requested not to deduct PF. We completed the process of signing the application.

Query on PF Contribution Policy

I would like to know if there is a policy that allows her to opt out of PF contributions or if she is required to pay the PF. I am looking forward to your valuable feedback on this matter.

Thanks & Regards,
Priya

It all depends on the company's policy. If you have a written company policy, then it would help you. You can also ask the finance department or your CA about the policy if there is nothing written.

Regards

Is the Company Policy Enough? According to the PF policy, we should deduct for all, right? Sorry, Ms. Anu, could you give me more clarity on this?

Thanks in advance.

Regards,
Priya

If she has withdrawn her PF contributions and now she is above the limit of 6500, then she can opt out of PF. But if she has not, then you have to continue with PF contributions.

First, let's check if she has completed 60 years. If not, she is eligible for PF. If she has opted for non-contribution, check if you have obtained approval from PF authorities for the exemption of PF contribution for those drawing more than a ₹6,500 basic salary. If not, you will have to contribute to the PF accordingly.

Provision in the PF Act

There is a provision in the PF Act where an employee who has already received the terminal benefits of PF, gratuity, and superannuation can choose to have PF deductions made at their option. Refer to Section 69(1) and read the definition in 2(f).

I agree with Mr. Sekhar. My CMD is around 81, and even now, we have been contributing to his PF account. It is up to the discretion of the management and its policy. As some of my friends said, once an employee attains the superannuation age of 58/60, the management can discontinue contributing to PF even though the employee continues in service. As another friend suggested, even though the salary is more than 6500, the contribution can be limited to Rs. 6500/- only.

Hope this is clear.

Regards,
G.K. Manjunath

Unless the member of the EPF has withdrawn or has crossed the age of retirement, at least 58 years of age, he has to continue as a member but subject to the ceiling of employer contribution at the pay of Rs. 6500. However, beyond the above provision of the Act, everything depends on the company policy but subject to better terms for the employee.

Regards.

Mere withdrawal of earlier PF will not be enough. He/she should have withdrawn the amount:

1. On retirement after attaining 55 years.
2. On migration from India.

Withdrawal for any other reason is not entitled to exemption, even if the salary is above Rs 6500 per month.

Regards,
Varghese Mathew

Conditions for Excluding an Employee from PF Contributions

In my opinion, she can be treated as an excluded employee at this stage under the following conditions:

1. If she is more than 58 years of age.
2. If she has withdrawn her PF benefits from her earlier employment.
3. If her Basic wage is more than Rs. 6500/- per month in the new employment.

In case she was a member of EPF and has not withdrawn the contributions, now she can't be excluded, at least until the age of 58 years.

Regards,
AK Chandok
RPFC (Retd.)

I think there is no option to be exempted from PF contribution.

Just a clarification on the withdrawal of PF. If a person has left the previous organization and joined another organization immediately or within a few weeks, then he/she can't withdraw the PF. There has to be a gap of at least 2 months between two jobs.

Let's say a person left his job with a 3-month gap and withdrew his PF. Now, as there was a gap of more than 3 months in the next job, he can opt for the no PF option in the next company. If it's not the case, then he/she has to opt for PF.

PF Contribution and Age Considerations

PF contribution is mandatory within the PF Act irrespective of age. In case the person remains an employee and upon attaining 58 years, no deductions are to be made for the family pension. This is what the law indicates and implies.

Dear Priya, Your employee worked for a government organization and opted for VRS. This indicates that at the time of separation from the government organization, the employee hadn't achieved the retirement age. The employee used to have her PF deducted in the government organization, indicating that she was a member of the PF scheme. She joined your company in 2009 and requested not to have PF deductions, and you processed the application by signing the exemption form (PF form-11) for her.

Query on PF Contribution Policies

Now, your query is: Are there any policies that allow her to opt out of PF contributions, or is she required to pay the PF?

The answer lies in options A & B:

Option A

- If the employee has reached the retirement age when joining your organization, she can be a part of the PF scheme only, not the Pension fund.

Option B

- If she has not attained the retirement age, she will be eligible for both PF and Pension. The Pension will cease once she reaches retirement age, while PF contributions will continue.

It's important to note that once an employee has been a part of EPF, they cannot opt out of it throughout their employment in all companies. Employees often falsely declare in form 11 that they have never been part of the PF scheme, but this information can be verified through the options provided in form 11.

For further information, please refer to form 11 of the PF. It will address all your queries.

Best Regards, Sunita Dhoundiyal

Correct Reply on PF Application Policy

The reply from Adv. Dr. Ashok Chandok regarding the PF application policy is 100% correct. All are requested to follow the same whenever and wherever the condition arises.

Regards,
Jagdish Yadav
Mussoorie
[Phone Number Removed For Privacy Reasons]