Navigating PF Contributions: Can I Manage My Account Solo with a Tight Budget?

For the past 2 years, I have been working in a corporate company (this is my first job), and it has provided me with PF as my basic salary is less than 6500. Currently, I am moving to another company where my basic salary is more than 6500. According to the new company's policy, they are not providing PF to employees whose basic salary exceeds 6500. However, I am interested in continuing my PF account. I requested the company to give me the opportunity, and they said I can continue it, but both the employee and employer contributions should be paid by myself.

Question 1:

I heard that there is an option to transfer the PF account to a personal account so that I can contribute to it. Is this possible? Please let me know.

Question 2:

Although the company agreed to allow me to continue the PF account, they mentioned that both employee and employer contributions should be paid by me. The issue here is that I would have to afford more than 4000 per month, and considering my current situation, I cannot afford such a large amount. Please provide me with a solution.

Regards

Continuing Your EPF Membership

Once earlier, you were an EPF member. It needs to be continued with a base salary of Rs 6500, and it is not optional. However, you need to first check if the new employer has a separate social security provident fund.

Regards

I appreciate you sharing your case here. My suggestion is to insist with your employer that you want to continue the PF. Don't mention committing yourself to all contributions, and neither sign nor give your commitment to it. I personally feel it's just an excuse by employers to avoid their obligation by not contributing to PF. Do not discontinue your scheme; it's my strong suggestion to continue it. I discontinued, and I know the loss I am at today.

Besides, yes, you can open your own PF account under NPS. I have attached a wonderful article for your study. Hope it's helpful.

Regards,
Ukmitra

Mr. Vibhakar has given the correct views. I may add here that under Para 31 of the EPF Scheme, the employer's share is not to be deducted from the members.

Regards,
Chandok AK
RPFC (Retd.)
Note: The link provided is no longer available.

Hi, sir, thank you. This document is very interesting. I have informed the employer about the government rule that if an employee has a PF account, then they have to continue it forever. However, they are strongly stating that as per their company norms, they are not providing PF to employees whose basic salary exceeds 6500. What should I do now?

Transfer of PF Account to NPS

As you mentioned about NPS, is there a way to transfer my current PF account to NPS?

Regards, Rohit Manoj

Hi Manu, I appreciate you sharing your case here. My suggestion is to insist with your employer that you want to continue the PF. Do not commit yourself to all contributions and do not sign or give your commitment to it. I personally feel it is merely an excuse by employers to avoid their obligation by not contributing to PF. Do not discontinue your scheme; it is strongly suggested to continue it. I discontinued, and I know the loss I am facing today.

Moreover, yes, you can open your PF account under NPS. I have attached a wonderful article for your study. I hope it is helpful.

Regards, Ukmitra

The limit of PF membership is restricted to individuals who draw a salary of Rs. 6500 and beyond. For new employees, the company will not cover amounts exceeding this threshold. If you are joining another company with a salary higher than Rs. 6500, you can request the company to only deduct PF contributions based on Rs. 6500 and consider making additional contributions to Voluntary PF from your end.

Moreover, you can negotiate with the company to increase your salary to accommodate this change.

Regards,
Eswararao Ivaturi.

Mr. Eswararao Ivaturi's comment is correct. You do not need to pay Rs. 4000/- as PF contribution as per your current basic. You just need to inform your employer to deduct the PF contribution on Rs. 600/-, which will work out to Rs. 780/- for the employee's contribution and Rs. 885 for the employer's contribution, including administrative and EDLI. So, the total would be Rs. 1665. Nowadays, no company is paying the employer's contribution; instead, it is added to employees' CTC. Therefore, in most cases, employees are paying both contributions.

Thanks and regards,
Nilesh Soni
[Phone Number Removed For Privacy Reasons]

Mr. Eswararao Ivaturi's comment is correct. You do not need to pay Rs. 4000/- as PF contribution based on your current basic salary. Simply inform your employer to deduct the PF contribution on Rs. 6500/-, which will amount to Rs. 780/- as the employee's contribution and Rs. 885 as the employer's contribution, including administrative and EDLI. The total contribution would be Rs. 1665. Nowadays, no company is directly paying the employer's contribution; it is generally included in the employees' CTC. Therefore, in most cases, employees end up paying both contributions.

Thanks and regards,
Nilesh Soni
[Phone Number Removed For Privacy Reasons]

EPF and NPS are two different schemes, and you cannot transfer funds between them. EPF is maintained by the employer, and NPS is a self-financed fund.

Regarding salaries above 6500, please note that the cap for 6500 is for the contribution amount from the employer, i.e., the employer is not liable to pay to your PF fund more than 12% of 6500. However, an employee can, on a "Voluntary Basis," contribute more than 12%. Insist with your HR that you have a PF account and would like to continue the same.

Another point to note is that the transfer of PF from one company to another was a cumbersome process, but I believe EPFO has now made it available online. Please check on their website.

It appears your company, like many in India, places the basic at a higher side to avoid paying PF. Your HR may not be aware of the legal obligations, but your MD/CEO likely is aware that it is their obligation to continue your PF upon request. They may prefer to avoid the PF submission and related bureaucracy.

Companies that do not wish to have PF typically obtain written confirmation from all employees stating their preference not to subscribe to PF. My advice is to rally a few more employees to request inclusion in PF. Here are some excellent resources from people I follow. Read them and share with your friends and colleagues:

- [Anand's Blog: All Your Questions about Employee Provident Fund - Answered!!!](http://anandvijayakumar.blogspot.com/2013/04/all-your-questions-about-employee.html)
- [Anand's Blog: Employee Provident Fund - Demystified](http://anandvijayakumar.blogspot.com/2013/03/employee-provident-fund-demystified.html)

I have heard from my sources that the government might soon change the employer contribution and the definition of the basic salary, making PF compulsory for all employers. This is good news for employees, and I am eagerly awaiting this development. Here is a link for more information on what I mentioned:

- [New PF contribution rule may reduce your take-home salary | Wealth18.com](http://wealth18.com/new-pf-contribution-rule-may-reduce-your-take-home-salary/)

In short, I urge all young workers between the ages of 18 to 32 not to forgo the PF options while negotiating their salary. Your take-home pay may be less, but in your retirement years, you will reap the benefits.

Wishing you good luck.

Regards,
Ukmitra

As I understand, your employer is not willing to contribute to the employer's PF portion. I would suggest you can invest your savings into the Public Provident Fund (PPF). You will be entitled to Sec 80C if applicable. In PPF, only your contribution is applicable, and you can take advances as well in the future. Moreover, I would recommend that if you want, you can withdraw money from the old PF account and deposit it in the PPF account. After all, the objective of saving for our future needs is important, where PPF is a typical retirement product.

Regards,
RAVI.

Seems to be a logical answer, especially since one should know that in EPF, even the government pays 1.16% for the pension fund, which is not available in any other scheme. The rate of interest has also been good so far. As suggested by Sh Mitra, don't let your EPF go.