Is It Legal for a Company to Skip PF Deductions? What Happens to My Existing PF?

I have been working with an IT company for 2 years. I have a PF account with proper deductions of employee and employer contributions. Currently, I am receiving an offer from another company where the number of employees is more than 20. The salary is above 6500, but HR says since the company does not have its PF account, it will not deduct PF from the salary.

Is It Legal and Practical?

So, my question is, is it legal and practical? What would happen to my previous PF account if I close it by withdrawing the money? Will I be eligible next time for a PF account with some other company?

Understanding PF Ceiling Limit and Coverage

You may be aware that the ceiling limit of PF has been enhanced from ₹6,500 to ₹15,000 with effect from September 2014. If an organization employs 20 or more individuals, they should automatically be covered under the PF Act. Coverage of PF is mandatory under the aforementioned act.

My suggestion is please don't withdraw your PF; instead, opt for a scheme certificate. I hope this clarifies your doubt.

Regards,
S. Rajasekaran

Thank you very much for your reply. However, I am not clear about the "scheme certificate." Could you please elaborate a little on this? Also, is it safe to work in a company where PF is not deducted? What will happen if, after some years, I apply to another company? Will they consider my candidature, or will they reject it because I did not have PF?

Thanks again.

If an organization does not have more than 20 employees, then it will not fall under the ambit of the PF Act. You will not be covered under PF in this case. Your old PF amount can be withdrawn by filling out Form 19. When you join a new organization, you can be given a new PF account number, or the old contributions can be transferred if you retain the old contribution until getting a new job.

Hi, scheme certificates only enable you to accrue your pensionable service on superannuation or on attaining your age of 50+ (wherein you will get reduced pension if pension is claimed before attaining the age of 58 years). You can have any number of scheme certificates, and all these can be submitted at the final claim for pension, maybe at 50+ or on superannuation. The more years of service, the higher the amount of pension you will receive. So always go for a scheme certificate.

Best regards,
T A G Manner Mannan