Understanding Your Provident Fund: What Happens to Your Pension When You Leave a Job?

Hi,

We contribute 12% towards PF, out of which 8.33% goes to the pension and the rest to PF. We can withdraw the PF amount when we leave the organization, but what about the pension amount? How do we get that? Do we receive the pension amount when we leave, or what is done with that amount? Does it remain with the organization or is it paid out to the employee?

Thank you.

Your query is a subject matter under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, and Schemes. Actually, the employee's contribution (Your contribution) goes to your P.F. Account. Out of the matching contribution given by the employer, 8.33% subject to a maximum of Rs. 541/- is diverted towards the Employees' Pension Scheme under the Act. This amount is deposited by the employer every month with the Regional P.F. Commissioner of your area.

Upon your transfer or on joining another organization which is covered under the Act, you should get the amount transferred to the nearest RPFC by filling up the relevant form (Form 13-A-Revised). The pension under the scheme is payable on attaining the age of 58, even though you may be serving in your organization beyond this age, say up to 60 years.

Ashok

Hello Ashok,

It seems that you are the right person to clarify my doubt! Actually, my question is: what is the difference between CTC and gross pay?

Regards,
Joshi

Dear Joshi,

Thanks for the compliment. I am not a compensation expert, but let me try to shed some light on this.

CTC or Cost to the Company is an inclusive concept. It includes, besides the gross pay, several other cost components that the employer incurs on its manpower. Costs incurred towards pension contributions, EL encashment, Gratuity, etc., which are not paid out to the individual employee on a regular basis but are nevertheless borne by the employer, are instances of CTC. Net pay is the actual amount or the cash in hand that you get after the applicable deductions.

Ashok

Subject: Inquiry Regarding PF and ESI Contributions

Dear Mr. Ashok Kumar Mishra,

I am a new member of CiteHR.com and am seeking information regarding PF and ESI. As per my understanding, 12% of the contribution (from employees) based on the basic salary is allocated to the PF, with the remaining 12% covered by the employer.

For instance, if the basic salary amounts to 25,000, the employer's contribution would be 3,000. However, there is a ceiling limit set at 6,500 or 780 only.

I would appreciate it if you could clarify this doubt for me. Additionally, I kindly request your contact details, including your email ID.

Regards,
K. Ravi Kumar
E-mail: kasinaravikumar@gmail.com
Ph: 09989111149

Dear Ravi,

If I am not wrong, you have calculated that in a wrong way. The PF will be deducted on the basic salary of the employee but not on the total salary. I suspect the percentages are as follows: the employee's contribution is 12% on his/her basic salary, and the employer's is either 13.01% or 13.91%.

If I am wrong, please correct me!

Regards,
Joshi

Hi Joshi,

The PF employee contribution is 12%, and the employer contribution is 13.61% from basic. For ESI, the employee contribution is 1.75%, and the employer contribution is 4.75% from gross.

Thanks,
SaiUma

Dear Ravi,

If a person is drawing a salary of 25,000/- per month, only PF is paid from the basic, and ESI is paid from the gross. As you mentioned, there is a ceiling limit of 6500/-, but it depends on the employer's wish. If the employer is willing to pay above 10,000/-, they have to provide a letter to the PF department, and then they can pay PF for the employee.

Thanks,
Uma

Hi Ashok,

Thank you for the information. However, if a person decides to leave their job and does not plan to work in the coming years, they will still receive the amount after they attain 58 years of age.

This is K. Ravi Kumar from Hyderabad. Please clarify my doubt regarding provident fund contribution. Below, I'm giving you some pay details of my colleague.

BASIC: 17,510.00
House Rent Allowance: 7,004.00 (40% of Basic)
Transport Allowance: 1,751.00 (10% of Basic)
Performance Incentive: 5,253.00 (30% of Basic)
------------------
GROSS SALARY: 31,518.00

P.F = 2,101.00
Professional tax = 200
TDS = 1,500

Now, clearly tell me the employee's contribution as well as the employer's contribution.

Regards,
K. Ravi Kumar
E-mail: kasinaravikumar@gmail.com
Ph: 09989111149

Hi Ravikumar,

As you mentioned about contributions of employees and employers are correct. Both are contributing 12% each, which is calculated on Basic salary + DA, subject to the ceiling limit of Rs. 6,500 as per the act. It means that even if you are getting more than Rs. 6,500, they will calculate the contribution on 6,500 only. If you are interested in paying more, you can opt for that. However, the employer will calculate based on Rs. 6,500 only.

I think I mentioned it clearly. If I am wrong, please correct me.

A. Ravikanth

Mobile: 9848294239

Email: ravikanth.allanka@gmail.com

Hi Ravikumar,

Here, I am clearly mentioning the contributions for PF:
- Employer: 12%
- Employee: 12% (8.33% goes to the Pension Scheme, and the remaining 3.67% goes to PF)

So, in total, it amounts to 15.67% (Employer 12% + Employee 3.67%) for PF.

If you have any doubts or need corrections, feel free to email me.

A. Ravikanth
9848294239
ravikanth.allanka@gmail.com

I'm very much confused about the Provident Fund. Employee's share is 12% of basic salary. Employers' share is also 12% of basic salary, out of which 8.33% goes to the Pension Fund and 3.67% goes to the Provident Fund.

I am attaching my payslip and my senior colleague's payslip. Can you please help me understand how much of the employer's share (employer's contribution) goes to the PF and Pension Fund?

Please assist me in this matter.

Regards,
K. Ravi Kumar
E-mail: kasinaravikumar@gmail.com
Ph: 09989111149

Dear Joshi,

I need clarification regarding employer contributions. I am totally confused about the employer contribution. Here, I am enclosing my payslip as well as those of my colleagues. Please review them and inform me about the employer's contribution.

I am eagerly awaiting your response.

With regards,
K. Ravi Kumar
E-mail: kasinaravikumar@gmail.com
Ph: 09989111149

Dear Sir,

Please find the attachment.

I am confused. For Mr. Rajshekhar Naidu, the basic salary is Rs. 11,300/-, and we paid the PF employee and employer contributions at 12%, which amount to Rs. 1,356/- each.

My doubts are:

1. Is the calculation in Combined Challan A/c I and A/c 10 correct?
2. Are the amounts in Form 3A and 6A for EPF and Pension Fund correct? (I calculated the employer's share in Combined Challan A/c 1 and A/c 10 based on a basic salary of Rs. 6,500/-, but in Form 3A and 6A, I calculated EPF and Pension Fund based on a basic salary of Rs. 11,300/-.)

The calculation should actually be based on the basic salary of Rs. 11,300/-. Please kindly clear my doubts as soon as possible.

Best regards,
Revu. :-x

Dear Sir,

I have just joined this HR. The questions and answers displayed are great, clarifying every doubt about HR-related queries.

My query is, I have been working with an organization in mutual funds for the last 16 years. I want to switch jobs. How do I calculate my CTC, and what are the other offerings in the industry today? I am 39 years old, and my basic salary is 18,300/-.

Thank you.

Dear Sir,

I have been with the organization for the past 16 years. I have a self-provident fund with the organization where the employer is not participating, and I also have a pension where the employer is participating. If I decide to leave the organization today, would I be eligible for the pension if I join another organization? Please guide me.

Thank you.

Dear Kasina Ravikumar,

Your contribution to EPF is Rs. 2101. Out of the employer's contribution, Rs. 541 (8.33% of 6500, which is the ceiling) will go to the pension fund, and the balance of Rs. 1560 will go to EPF as the employer's contribution.

Abbas.P.S

If I am not wrong, you have calculated that in a wrong way. The PF will be deducted from the basic salary of the employee but not from the total salary. I suspect the percentages are as follows: the employee's contribution is 12% on his/her basic salary, and the employer's contribution is 13.01% or 13.91%. If I am wrong, please correct me!

Regards,
Joshi

Clarification on Employer's Contribution

Let me clarify that it is not 13.91%, but it is 13.61%. The breakup is as follows: in account 1, 3.67% (not actual, as it is the difference between 12% - 8.33%), then in account 2, 1.1%, in account 10, 8.33%, in account 21, 0.5%, and in account 22, 0.01%, which totals to 13.61%.

Regards,
Milan

I'm a little unclear on calculating the PF amount and am getting confused because of my employer's calculation. Please find the deductions below and clarify my doubts.

My Salary Breakup:

Basic - 5028

FDA - 2514

Total - 7542

Employee contribution - 905 (12% of Basic + FDA)

Employer contribution - 239 (12% - 8.33% from the 6500 ceiling limit)

Pension Scheme - 541 (calculated with the 6500 ceiling limit)

My doubt is whether the employer has calculated the employee contribution with both the Basic + FDA, which is above the 6500 ceiling limit, and the employer contribution is calculated only with the basic salary, which is below the 6500 ceiling limit. Is this calculation correct? Or is the employer calculating wrongly? Please clarify my doubts.

Thanks in advance.

Regards,
R. Prabu

Provident Fund and Pension Query

This is V. Kamalnath. Please clarify my doubt regarding the provident fund. If an employee is already receiving a pension amount and then joins another company, should the employer deduct the PF contribution, or is the employee not eligible for PF?

Regards,
V. Kamal

Can anybody guide me on whether, if I absconded from an organization, I am eligible to get my PF amount? Alternatively, can I transfer the full PF amount to another organization after absconding from the previous one?

Thanks & Regards,
Sangram.

If the member becomes permanently and fully disabled, he will receive a pension.

Regards,
Abbas. P. S

If a company does not have a pension plan in place, then what would be its PF contribution (from the employer's as well as the employee's sides)?

Thanks!

I just have a doubt after reading all the above discussions and am left with a question: What about the PF Pension Amount if I die before attaining 58 years of age? What would happen to that amount?

Thanks in advance.

Regards,
Sumit Garg

I changed my organization last year and transferred my PF account-related amount. Now, when I see my downloaded PF passbook, I see the amount in deposits (employee, employer share). However, while checking the "Diverted to Pension fund" column, it's showing as ZERO.

As per my understanding, ₹541 per month goes to the pension fund, and after my 5 years of service, I believe the pension fund amount should have been around ₹30,000. Please, can you help me understand why this amount is not shown in the transferred amount? Could it be a system glitch, or does it get lost when you switch companies?

Many thanks in advance.

If a laborer has a basic salary of Rs 4000 per month and has been working for the past 2 years, please provide me with an idea of how much PF is saved in his/her PF account.

For 4000 Rs per month, PF comes around 480 Rs per month (12% of BS).

Now, it depends on whether there was a contribution by the labor also towards PF or it was only Employer contribution?

So if it was only the employer's PF amount, it should be around 3520 Rs approximately + interest (PF fund) 8000 Rs approximately (8.33% of BS Pension fund). If there is employee contribution, add Rs 11520 more to it (+ interest).

Hi, this is Rajasekhar from Warangal.

Employee's share of my PF account is 60200, employer's share is 21712, and the pension fund is 32691.

How much amount will I get if I resign from my job?

Thanks,
Rajasekhar.

Hi,

Please, can anyone help me to understand the pension part in EMF? For example, I left one organization after 5.3 years and joined another one. During PF transferring, only the employee share (Rs 79545) and employer share (Rs 38520) were provided, and the pension/contribution (Rs 0) was shown. I received only Rs 79545 + Rs 38520 = Rs 118065. Can someone please explain this?

Regards,
Sudhir

Dear Sir,

One of our employees has crossed 58 years of age and completed 6 years of service. We would like to understand if the PF contribution amount will now go into the pension scheme, or if it will continue to be deposited in the employee PF fund.

Could you please clarify this for us?

Regards,
Narendra Kumar

Dear Mr. Ravi,

I tried calling, but no luck as your cell is showing switched off. Can you be so kind as to let me know what happens to the employers' contributions which go towards the pension fund?

Do we get it back along with PF when we withdraw when we change jobs, or does it just remain with the EPF office? How can we check the balance of the pension fund? Is the PF balance shown on the EPF site/mobile app inclusive of interest earned till date or just the contributions?

Regards,
Kisshor T.

Clarification on EPS Transfer

I have transferred my PF from Old Org. 1 (PF Trust and RPFO, Bandra) to New Org. 2 (PF Trust and RPFO Ahmedabad). When I received the Old Org. 1 letter, I found out that only my PF amount was transferred, and the amount under EPS was retained or to be transferred from RPFO (Bandra, Mumbai).

Now, I have changed my job from Org. 2 to New Org. 3, which has a new RPFO (at Vashi, Navi Mumbai). I applied for an online PF transfer in mid-October as both Org. 2 and 3 have digital signatures, and it is still under process after 1.5 months. As Org. 2 has a PF trust, it might be possible that the EPS amount is kept at the regional PF office in Ahmedabad due to trust involvement.

How can I transfer the EPS amount from Old Org. 1 (RPFO Bandra) to New Org. 3 (Vashi, Navi Mumbai)? Will it be the same condition as point 1, or will the EPS amount along with the PF amount be transferred from Org. 2 to Org. 3 RPFO? If it is not transferred to Org. 3 RPFO, then how would I process the same?

Thanks/Regards,

Ashok