Can You Keep Earning Interest on PF After Retirement Until Age 63?

A person is getting superannuated in the near future. However, they do not want to withdraw their PF accumulation for three more years post superannuation at the age of 60 years as they are contributing through a PF Trust. Is it possible? Will they continue to earn interest up to the age of 63 years? Are there any formalities that need to be completed in between?

PF Trust Documentation and Payment Process

As a general rule, the PF Trust is required to obtain the necessary documentation and pay the amount upon an individual's retirement. However, if there is some documentation missing (e.g., KYC or bank account details), the Trust will keep the matter on hold to avoid legal liability.

However, it is a bad practice and should be discouraged.

Issue with Private PF Trusts

This is an issue that private PF Trusts are facing. The superannuating employee prefers to keep the amount in the PF Trust as it provides a substantially higher rate of interest and there is the option of withdrawal at any time. So keeping the money in such an account is always better for a retiring employee. This issue was faced by me as a Trustee of the exempted PF Trust, and it was affecting the investment as the PF accumulation of the retired employee had to be provided immediately upon their application. The number of retired employees retaining their PF amount grew large, threatening the very viability of the trust as it had to offer almost twice the interest rate in comparison to the current account interest rate.

Solution Implemented

To address this problem, we issued a circular stating that the PF Trust will give the notified interest for only a limited period, 3 months, and thereafter the amount will be transferred to a suspense account with no interest being provided. Through this process, we were able to overcome the problem.

Hope the above information is useful.

Doesn't that run counter to the PF regulations? If there is a complaint and an inspection takes place, will the PF authorities accept that? I'm asking more because I don't know the impact.

Yes, strictly speaking, the PF Inspector could have objected as there is no such provision for it. On the other hand, there is no provision to keep the fund indefinitely after retirement. So, it has to be a reasonable period; we chose three months for it and amended our PF Trust Rules to that effect. Fortunately, we could persuade PF authorities to agree to our proposal as otherwise the Trust was becoming unviable. We had retirees of more than five years parking their fund in PF. We had no alternative to keep the Trust alive, and this worked. Almost all the old retirees thereafter withdrew their PF accumulation immediately, and we could heave a sigh of relief. These are practical wisdom dictated by the circumstances which will not be there in any textbook; the excellent rapport we had with PF authorities had helped.