Concerns About PF Pension Withdrawal: Should You Cash Out or Wait for Retirement Benefits?

Concerns About PF Pension Withdrawal

I would like to know if there are many employees who do not wish to have their PF pension amount moved to the pension fund after completing 9 years and 6 months of service and instead wish to withdraw all their PF/pension amount.

In this matter, I found lots of answers and arguments (also from my senior). Please find some of them below:

1) Pension starts at the age of 58 years... (who knows if I will be alive or dead?)
2) What is the value of a small pension amount of 2000 or 5000 at my age of 58?
3) Is it better to invest in other sources such as Mutual Funds, Bank FDs, NSCs...
4) After starting a pension at the age of 58, how long will I live? (What a mentality?)
5) We do not get as much money as our pension funds have been funded.
6) If I invest in other sources, I will receive more money instead of a pension.

Are these arguments true?

The Safety of Government-Run PF

The PF run by the government is absolutely safe and guaranteed. It offers decent tax-free interest and compound interest. Allowing money to remain in the PF for long-term goals like retirement and for safety in case of emergencies is advisable. Other investments carry risks, and you may lose your entire capital, as seen in the case of IL&FS, a AAA-rated company that went bankrupt overnight. It is crucial not to jeopardize your retirement funds.

Investment Options Beyond PF

Additional amounts can be invested according to a plan into Mutual Funds (MF) or the National Pension Scheme (NPS), among others. However, having a financial roadmap is essential. While no one can predict when they will pass away, it is not prudent to engage in risky investments or live for the present only; rainy days will inevitably come in everyone's life. Even the most prominent industrialists have to face financial challenges, with some even facing Supreme Court orders to repay debts or risk imprisonment.

Financial Security for Salaried Individuals

For salaried individuals, developing a saving habit and prioritizing capital safety are vital. PF accumulations are tax-free, unlike Fixed Deposits (FDs), National Savings Certificates (NSCs), or Mutual Funds. Therefore, it is important not to rely on casual advice and prioritize financial security.

Pension and Nominee Benefits

Pension is payable to employees and, after their death, to their nominee (usually the spouse) until death.

Pensions are renewed from time to time. Even old pension holders who were eligible for less than 100 rupees are now receiving a minimum guaranteed pension of 1000 rupees.

Insurance Claims for Dependents

In the event of an employee's death during the service and contribution period, the dependents/nominee become eligible for an EDLI-based insurance claim ranging from 1.5 lakhs to 6 lakhs, depending on the service period.

EPF as a Dependable Investment

EPF (Government) is the most dependable investment for the future, without any risk.

Hi,

Yes, PF is a social security measure. With PF/Pension savings, you are eligible for tax exemption based on your salary slab. Based on your continued service, you will get a lump sum PF saving during your retirement days. You will become eligible for regular monthly Pension, which the nominee of the Member will continue to get after the demise of the member. PF is secured, unlike the share market or MF, which are uncertain.