New Delhi: The Employees’ Provident Fund Organisation (EPFO), which manages the provident fund and pension schemes for employees in the organised sector, has announced new rules for withdrawing money from the provident fund. These updated guidelines cover both partial withdrawals during employment and full withdrawals after leaving a job, aiming to make the process clearer and more convenient for members.
In a big relief for employees, the government has eased the Provident Fund withdrawal rules. If a person becomes unemployed, they can now withdraw up to 75 per cent of their PF balance, which includes both employer and employee contributions along with the interest. The remaining 25 per cent can be taken out after one year if they are still not employed.
Under the new proposal, employees who lose their jobs will be able to withdraw their Employees’ Pension Scheme (EPS) savings only after 36 months, instead of the current 2-month waiting period. The government says this change is meant to promote long-term financial security by ensuring that members and their families continue to receive pension benefits in the future.
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But what happens to your PF account if you switch jobs or stop contributing? And for how long does EPFO keep paying interest on your balance? Let’s break it down in simple terms.
EPF Withdrawal and Job Change Rules
If you’re unemployed for over two months, you can withdraw your EPF balance. However, if your total service is less than five years, the withdrawn amount becomes taxable. Both your contribution and your employer’s share, along with the interest earned, are taxed according to your income level. But if you leave the money in your account and let it earn interest, it won’t be taxed during the active period.
When you switch jobs, it’s best to transfer your EPF account instead of leaving it idle. With your Universal Account Number (UAN), you can easily move your balance through the EPFO website. This keeps your service record continuous, preserves tax benefits, and ensures your savings grow without interruption.
Don’t Neglect Your EPF Account
Ignoring your EPF account can cost you more than you think. Over time, the lost interest and tax benefits can make a big difference to your retirement savings. If your account is left inactive or your KYC and bank details are outdated, retrieving the funds later can become a hassle. To avoid this, make sure to update your EPF details regularly and merge multiple accounts if you have changed jobs. Staying on top of your EPF helps you build a stronger and more secure retirement fund.
Inactive PF Account Can Lead to Trouble
Leaving your PF account inactive for too long can create several problems. After a certain period, the account stops earning interest, and tracking it becomes difficult. If your mobile number or bank details have changed, you may face issues receiving OTPs or filing claims. In some cases, the process can get even more complicated if the nominee information isn’t updated. To avoid such hassles, make sure to transfer your PF account when you change jobs or withdraw your balance if you’re not working for an extended period.
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