I am still unclear. Please do not mind. Kindly correct me if I misunderstood.
A person had his first job where he was covered under PF and had basic + da less than 6500.
Now he has serviced for 1 year and his salary is increased so that his basic + da is more than 6500 and is in same employment.
But he would still be covered under PF act and contributions is mandatory at the same 12% rate which can be reduced to 780 (12% of 6500).
Now if he changed to a new employment (obviously with salary hike) the new employer still will have to contribute 780 pm only because he had once been covered and so he continues to be covered for a life time???
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I have a doubt here sir, if it could be cleared.
A person was working with some firm for some years and was covered under PF Act.
He quit that job and joined us few years back.
We are not covered under PF Act.
In this case, should the person who has a PF account be given contribution for PF? Or he should close his PF account?
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As per the rule, actually an employee is supposed to transfer the PF account when he changes employment.
Meaning to say that suppose I am covered under PF Act in my current firm.
Now when I join another firm for better prospets, I should be submitting some form in my this office so that they initiate some process and my account is transferred to the new employment.
But it is a common practice that many employees just withdraw their PF amount and close the PF Account.
Is this benefitting?
Is this not tracked?
Looking forward to further guidance. Thank you in advance for patience and knowledge shared.
From India, Mumbai
737A person had his first job where he was covered under PF and had basic + da less than 6500.
Now he has serviced for 1 year and his salary is increased so that his basic + da is more than 6500 and is in same employment.
But he would still be covered under PF act and contributions is mandatory at the same 12% rate which can be reduced to 780 (12% of 6500).
Now if he changed to a new employment (obviously with salary hike) the new employer still will have to contribute 780 pm only because he had once been covered and so he continues to be covered for a life time???
============================
I have a doubt here sir, if it could be cleared.
A person was working with some firm for some years and was covered under PF Act.
He quit that job and joined us few years back.
We are not covered under PF Act.
In this case, should the person who has a PF account be given contribution for PF? Or he should close his PF account?
==============================
As per the rule, actually an employee is supposed to transfer the PF account when he changes employment.
Meaning to say that suppose I am covered under PF Act in my current firm.
Now when I join another firm for better prospets, I should be submitting some form in my this office so that they initiate some process and my account is transferred to the new employment.
But it is a common practice that many employees just withdraw their PF amount and close the PF Account.
Is this benefitting?
Is this not tracked?
Looking forward to further guidance. Thank you in advance for patience and knowledge shared.
From India, Mumbai
Yes, he will be covered in the new company with the max statutory amount of 780 per month (he can opt for higher amount, but that is not mandatory). This new employer will be required to contribute same amount of 780 per month.
He can withdraw his PF amount.
However, if he does not do that, he will earn interest for the next 3 years after which it will stop. So, the answer to your question depends on what his long term aims are. If he is going to join another company in 3 years which has PF, then probably he can keep it and transfer when he joins. He will get 8.5% tax free income in the mean while plus increased savings. If he does not want to wait or does not know his future plans, he may withdraw it.
Most employees are short sighted and want to draw the amount as quickly as possible
They do not look at long term impact.
In order to do that,,they give a false declaration to the old company and to PF that they are not working any more. And to the new company a declaration that they do not have existing PF account.
A different point of view that was posted earlier in the forum was that after 10 years of PF contribution, the amount in pension fund gets activated, if you withdraw before 10 years are over, you get the full amount of your and your employers contribution back. That money properly invested will give you more than the pension under fpf. That is IF you invest it :)
So, it's a complex thing that each one needs to decide on.
It is not currently tracked.
However, the PF department has already asked companies to,put in the Adhar I'd of the employee in the PF application and they will track it from there. I expect the tracking mechanism will be effective in 2 years time.
From India, Mumbai
He can withdraw his PF amount.
However, if he does not do that, he will earn interest for the next 3 years after which it will stop. So, the answer to your question depends on what his long term aims are. If he is going to join another company in 3 years which has PF, then probably he can keep it and transfer when he joins. He will get 8.5% tax free income in the mean while plus increased savings. If he does not want to wait or does not know his future plans, he may withdraw it.
Most employees are short sighted and want to draw the amount as quickly as possible
They do not look at long term impact.
In order to do that,,they give a false declaration to the old company and to PF that they are not working any more. And to the new company a declaration that they do not have existing PF account.
A different point of view that was posted earlier in the forum was that after 10 years of PF contribution, the amount in pension fund gets activated, if you withdraw before 10 years are over, you get the full amount of your and your employers contribution back. That money properly invested will give you more than the pension under fpf. That is IF you invest it :)
So, it's a complex thing that each one needs to decide on.
It is not currently tracked.
However, the PF department has already asked companies to,put in the Adhar I'd of the employee in the PF application and they will track it from there. I expect the tracking mechanism will be effective in 2 years time.
From India, Mumbai
Thank you SaswataBanerjee,
I had not known this.
I was told by this employee that when they withdrew their PF account, they had got 100% full money. I thought it must only be the 12% employee contribution and 3.67% of employer's contrinution (which goes to PF account) and the 8.33% og employer's contribution that goes to pension fund perhaps would not be handed over.
Thank you for the insight and clearing the doubts :-)
From India, Mumbai
I had not known this.
I was told by this employee that when they withdrew their PF account, they had got 100% full money. I thought it must only be the 12% employee contribution and 3.67% of employer's contrinution (which goes to PF account) and the 8.33% og employer's contribution that goes to pension fund perhaps would not be handed over.
Thank you for the insight and clearing the doubts :-)
From India, Mumbai
Wait !
Before we confuse each other.
If the amount is withdrawn before completing 10 years of PF contribution, then they get 100% back. If they withdraw after 10 years of contribution, then they get as you just said.
The 10 years includes multiple companies you have worked for and if you have multiple accounts that have been transferred to the latest account.
From India, Mumbai
Before we confuse each other.
If the amount is withdrawn before completing 10 years of PF contribution, then they get 100% back. If they withdraw after 10 years of contribution, then they get as you just said.
The 10 years includes multiple companies you have worked for and if you have multiple accounts that have been transferred to the latest account.
From India, Mumbai
I am totally confused. I think I should abreast my knowledge first. Till such time I must keep quite.
From India, Mumbai
From India, Mumbai
Hello SaswataBanerjee,
Sorry but again I read something contrdicting what you mentioned yesterday.
you mentioned that -
However, what I read today is -
You might not get 100% of your EPF money
Imagine your contribution + employer contribution has been total Rs 3,50,000 till date. Out of this 3,50,000 , suppose 2,50,000 has gone in EPF , and rest 1,00,000 has gone in EPS (for pension) . Now if you quit your job in 6th year of employment and opt for withdrawal of your EPF money (EPF + EPS actually) , then do you think you will get total 3,50,000. NO!
Thats because you always get 100% of your EPF part, but for EPS there is separate rule . There is something called Table „D‟ , under which its mentioned how much you get at the time of exit from your job, there is a slab for each completed year and you get n times of your last drawn salary (depending on the completed year of service) subject to maximum to Rs 6,500 per month. So if your salary in this case was Rs 30,000 per month, still you will be given only 6,500 * 6.40 = Rs 41,600. Note that the table D is upto 9 yrs only, because if 10 yrs are crossed, then you are liable for pension.
Source - Attachment "10 facts you may not know about PF" on post no.5 by loginmiracle on https://www.citehr.com/456226-pf-ded...ml#post2043209
Can there be some better explanation as it is just increasing the confusion. It may sound that I am asking too much, but honestly, I have 0 idea on it and would like to know.
Thanks in advance and sorry for all troubles.
From India, Mumbai
Sorry but again I read something contrdicting what you mentioned yesterday.
you mentioned that -
However, what I read today is -
You might not get 100% of your EPF money
Imagine your contribution + employer contribution has been total Rs 3,50,000 till date. Out of this 3,50,000 , suppose 2,50,000 has gone in EPF , and rest 1,00,000 has gone in EPS (for pension) . Now if you quit your job in 6th year of employment and opt for withdrawal of your EPF money (EPF + EPS actually) , then do you think you will get total 3,50,000. NO!
Thats because you always get 100% of your EPF part, but for EPS there is separate rule . There is something called Table „D‟ , under which its mentioned how much you get at the time of exit from your job, there is a slab for each completed year and you get n times of your last drawn salary (depending on the completed year of service) subject to maximum to Rs 6,500 per month. So if your salary in this case was Rs 30,000 per month, still you will be given only 6,500 * 6.40 = Rs 41,600. Note that the table D is upto 9 yrs only, because if 10 yrs are crossed, then you are liable for pension.
Source - Attachment "10 facts you may not know about PF" on post no.5 by loginmiracle on https://www.citehr.com/456226-pf-ded...ml#post2043209
Can there be some better explanation as it is just increasing the confusion. It may sound that I am asking too much, but honestly, I have 0 idea on it and would like to know.
Thanks in advance and sorry for all troubles.
From India, Mumbai
thank you Saswat for the information. The staffs generally leave within 6 months only so i thought it will not be applicable but thnx again for answering my query
From India, Kolkata
From India, Kolkata
I need to check on this and come back to you.
I do not have the full answer.
I also learned this morning during a discussion that in the first 6 months if you leave a company, your EPF amount is not returned or transferable to the new company.
I need Time to figure out and get back to you, as I will now need to read the full PF scheme document effort I open my mouth again.
From India, Mumbai
I do not have the full answer.
I also learned this morning during a discussion that in the first 6 months if you leave a company, your EPF amount is not returned or transferable to the new company.
I need Time to figure out and get back to you, as I will now need to read the full PF scheme document effort I open my mouth again.
From India, Mumbai
Nishi,
I cross checked this matter this morning when I was in a compliance review.
Many people seem to have a confusion or misinformation that PF is not payable for the first 6 months. That is completely wrong. PF is payable from the first day an employee joins. If someone leaves within 6 months, he can get his PF withdrawn or transferred to another PF account but he will lose his EPF amount. EPF is 8.33% of employers contribution. PF amount therefore is 12% of employees contribution and 3.67% of employer contribution.
From India, Mumbai
I cross checked this matter this morning when I was in a compliance review.
Many people seem to have a confusion or misinformation that PF is not payable for the first 6 months. That is completely wrong. PF is payable from the first day an employee joins. If someone leaves within 6 months, he can get his PF withdrawn or transferred to another PF account but he will lose his EPF amount. EPF is 8.33% of employers contribution. PF amount therefore is 12% of employees contribution and 3.67% of employer contribution.
From India, Mumbai
Just wish to correct a minor mistake, I guess it was just due to confusion.
As rightly said by Saswata,
12% of the employer's contribution is splitted into two -
1) Employee PF - (EPF) - 3.67%
2) Employee Pension - (EPS) - 8.33%
So when we withdraw the amount, we can get full PF (EPF) amount but the pension (EPS) amount can't be withdrawn.
I hope Saswata you meant this but confused with the EPF/EPS i guess.
From India, Mumbai
As rightly said by Saswata,
12% of the employer's contribution is splitted into two -
1) Employee PF - (EPF) - 3.67%
2) Employee Pension - (EPS) - 8.33%
So when we withdraw the amount, we can get full PF (EPF) amount but the pension (EPS) amount can't be withdrawn.
I hope Saswata you meant this but confused with the EPF/EPS i guess.
From India, Mumbai
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