Many young employees do not know how the Employees' Provident Fund (EPF) works and do not withdraw from it after ending their employment with a company due to lack of awareness.
Why should you withdraw your PF?
Even if you have quit your job and there has been no new deposits made to it, your PF account will remain "operative." Your PF balance as on the date of exit from your firm will remain tax-free but the interest that you earn on it after quitting your employment is still taxable.
It is therefore best to transfer the PF account to your new employer or withdraw from it through "final settlement" of you have not been working for over 2 months (60 days).
Withdrawal From EPS
Another important thing to note is that a part of your PF contribution also goes to EPS (Employee Pension Scheme) which you can also withdraw if your employment service period has been less than 9.5 years but more than 6 months. This is because you become eligible for member's pension after 9.5 years.
8.33% of the contribution you make towards PF goes to EPS.
So if your total years of employment has been less than 9.5 years, you can withdraw from your EPS too. You will have to fill both Form 19 and 10-C.
Types of EPF Withdrawals and withdrawal forms
- PF Final Settlement (Form19)
- Pension Withdrawal Benefit (Form10-C)
- PF Part Withdrawal (Form31): EPFO allows partially withdrawal of EPF accumulations in special circumstances like purchase or construction of house.
How to Withdraw EPF?
The Employees' Provident Fund Organisation (EPO) allows you to withdraw your provident fund (PF) online through EPFO's website. But if it so happens that you do not have access to a laptop to use the facility, you can now use the government of India's integrated service app UMANG to withdraw your PF.
You can withdraw your EPF online even if the UAN is not linked to Aadhaar but the easiest method requires your Aadhar to be linked to UAN. Make sure your Aadhaar linked mobile number is active to receive OTP.
In case you do not have an Aadhar, you can apply through the EPFO's website using the composite form. You will require PF number and PAN number while submitting the form to the EPFO office.
If you have an Aadhaar and want to apply for the withdrawal offline, you can apply with the same Composite Form without attestation from the employer. Attach a canceled cheque of the bank account you want to receive the PF amount in.
Withdrawing EPF before 9.5 years of service:
You can use the same composite form (link above) and choose "final PF" and "pension withdrawal." If you are planning to join work at a later stage, opt to get 'scheme certificate' by furnishing Form 10C.
Withdrawing EPF after 9.5 years of service
You cannot withdraw the EPS amount if your service period is less than 6 months or more than 9.5 years. You will receive your pension after you are 58 years old or you can opt for an early reduced pension from the age of 50 years.
If you are 50 years old and wish you apply for a reduced pension, fill the Form 10D.
If you are over 58 years old, you can claim full pension with Form 10D.
Quitting Job to Start Business?
EPF is a kind of forced savings, which you do not have the access to. It is best to transfer your PF to next employer after job change. If you happen to quit your job to start your own business, your EPF balance can be completely transferred to National Pension Scheme (NPS).
Also Read: How Does NPS Work? Should You Invest?