Provident Fund (PF): Rules On Withdrawal, Keep The PF Balance To Get Interest Up to 3 Years

Provident Fund (PF) is considered as a long-time investment opportunity for India's working force and it helps largely after their retirement. However, an employee can also withdraw their PF account balance even before their retirement, if they need, under some particular circumstances. As they change their jobs, they can withdraw the money after some point in time.

Avoid withdrawing the money after changing job

But after new rules concerning the PF fund, it is being recommended that an employee should avoid withdrawing the full PF balance, after leaving a job or changing a job. Because, in that case, it will certainly be a loss for the employee. There will not be any continuity of pension if you leave the job, then the PF account can save your future. Additionally, after retirement also, an employee can keep the PF account for a certain period. Otherwise, one can simply transfer the PF account to the new employers, in case someone is changing job.

Profitable interest for next 3 years

Interest on a PF account is certainly much higher than any other assured investment option, while it is tax-free. The interest rate on a PF balance is 8.50% according to the central government rules. Even if one leaves the job, but does not withdraw the money from the PF account, the same interest will be given to the account holder. After an employee leaves the job, still the employee will get the 8.50% interest on the PF balance for the next 3 years, that is for 36 months.

One person, who is out of a job, cannot contribute to the PF account. However, if for the first 3 years, the PF account does not receive any contribution, the account will be tagged as an inoperative account. So, then you should withdraw some money before 3 years, which will keep the PF account active.

Additionally, one should remember that the PF account will not be inactive if the contribution is not made. Although, the interest earned during the period will be taxed. Also, if an employee does not claim the money even after his/her PF account is inactive, the total money will be transferred to the Senior Citizens Welfare Fund (SCWF).

Check the balance

The EPFO has recently started to credit the interest amount of 8.50% for the FY 2020-21 in the accounts, and around 6.5 crores EPFO members are being benefited by this. Hence, an employee should check the PF balance to see if the money has been credited or not. You can use the UAN log-in to check the PF balance.

How to check PF balance online and offline, 3 ways

Government's aim

PF was introduced with an aim to implement the policies for a benefit structure with an adequate support level of social security. Also, the Employees' PF Organization's (EPFO's) mission was, "To extend the reach and quality of publicly managed old age income security programs through consistent and ever-improving standards of compliance and benefit delivery in a manner that wins the approval and confidence of members in our methods, fairness, honesty, and integrity, thereby contributing to the economic and social well-being of the nation." Hence, if you can keep your PF money longer, it will certainly be a profitable investment for an employee.

The government informs that, the Central Board of Trustees administers a contributory provident fund, pension scheme, and an insurance scheme for the workforce engaged in the organized sector in India. The Board is assisted by the Employees' PF Organization (EPFO).