Since 1/4/2004, in my present job, I have been contributing 50% and for the last 2 years 100% (of Rs.6,500) per month to the Provident Fund Scheme, and the Employer has been contributing Rs.780 per month. The latest balance in my account is about Rs.3.5 lakhs employees' contribution and Rs.58,000 employer's contribution.
I will be resigning from this company and shall take up the next job after a gap of 2 months.
Hence, I have the possibility of withdrawing both employees' plus employer's contribution after 2 months. If I do not withdraw, in another year (after completion of about 10 years), a significant part of the accumulations in my account will go into the Pension Scheme, where the returns are very low.
I am 51 years old, unmarried, with an 82-year-old mother, but do not require funds for any emergency presently.
Dear Sirs, kindly offer your valuable guidance if, in my case, I should withdraw the provident fund accumulations or transfer the balance amount to the Provident Fund account in my new job, even if it means opting for the Pension Scheme. I am unable to make up my mind.
From India, Mumbai
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3I will be resigning from this company and shall take up the next job after a gap of 2 months.
Hence, I have the possibility of withdrawing both employees' plus employer's contribution after 2 months. If I do not withdraw, in another year (after completion of about 10 years), a significant part of the accumulations in my account will go into the Pension Scheme, where the returns are very low.
I am 51 years old, unmarried, with an 82-year-old mother, but do not require funds for any emergency presently.
Dear Sirs, kindly offer your valuable guidance if, in my case, I should withdraw the provident fund accumulations or transfer the balance amount to the Provident Fund account in my new job, even if it means opting for the Pension Scheme. I am unable to make up my mind.
From India, Mumbai
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Kapil, My suggestion is to transfer your PF account rather than withdrawing. The returns wiil be good and you will get pension. Regards, Ravi.PDL
From India, Hyderabad
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From India, Hyderabad
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Dear Kapil,
Season's greetings to all.
I endorse Ravi Pdl's views. Moreover, you are just 51 and almost nearing the qualifying 58 years for a fat pension. Therefore, try to transfer your PF account to your new employer as and when you join them. You mentioned you don't have any emergency commitments, and it's prudent to continue, especially considering you stand to gain substantially with your new employer as a continuing PF subscriber; otherwise, you'll lose your new employer's contribution (which might be limited to 6500/-). Please examine in detail the pros and cons of your thinking a little more.
Also, please explain a bit more about the latter part of your point number 2.
Kumar S.
From India, Bangalore
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Season's greetings to all.
I endorse Ravi Pdl's views. Moreover, you are just 51 and almost nearing the qualifying 58 years for a fat pension. Therefore, try to transfer your PF account to your new employer as and when you join them. You mentioned you don't have any emergency commitments, and it's prudent to continue, especially considering you stand to gain substantially with your new employer as a continuing PF subscriber; otherwise, you'll lose your new employer's contribution (which might be limited to 6500/-). Please examine in detail the pros and cons of your thinking a little more.
Also, please explain a bit more about the latter part of your point number 2.
Kumar S.
From India, Bangalore
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Mr. Kumar, my contribution to the provident fund is Rs. 6,500 per month. The employer is contributing only 12% of Rs. 6,500, which amounts to Rs. 780 per month. Out of this Rs. 780, Rs. 541 goes to a separate "pension scheme". Therefore, in 20 years, the total amount that will go into this scheme is Rs. 541 * 12 * 20 = Rs. 1,29,840. No interest is paid on this Rs. 1,29,840. After reaching age 58, one receives a very nominal monthly pension of about Rs. 1,500-1,800. The principal amount of Rs. 1,29,840 is never repaid. The only benefit is that the individual receives this small pension of about Rs. 1,500-1,800 for as long as they live.
If an individual withdraws their accumulation from the provident fund account before completing 10 years, they are entitled to receive their own contribution along with the employer's contribution (which is not eligible for the "pension scheme" if 10 years have not been completed). They receive both the employee's and employer's contributions with interest. Consequently, many individuals withdraw the entire corpus before the provident fund account reaches 10 years of age. The drawback in this scenario is that the individual is not eligible for any pension, therefore sacrificing a certain level of "social security".
Dear Sir, I have done my best to explain the scheme as I understand it. I look forward to and would be grateful for your opinion and guidance on whether to withdraw the provident fund corpus now or transfer it to my new provident fund account in my new job.
From India, Mumbai
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If an individual withdraws their accumulation from the provident fund account before completing 10 years, they are entitled to receive their own contribution along with the employer's contribution (which is not eligible for the "pension scheme" if 10 years have not been completed). They receive both the employee's and employer's contributions with interest. Consequently, many individuals withdraw the entire corpus before the provident fund account reaches 10 years of age. The drawback in this scenario is that the individual is not eligible for any pension, therefore sacrificing a certain level of "social security".
Dear Sir, I have done my best to explain the scheme as I understand it. I look forward to and would be grateful for your opinion and guidance on whether to withdraw the provident fund corpus now or transfer it to my new provident fund account in my new job.
From India, Mumbai
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Dear Kapil,
You have analyzed your situation very well. In fact, I don't really see the dilemma!
If you withdraw the entire fund from the current account and make a fixed deposit in a bank, or deposit in a PPF account, you will get good returns as against the small pension on retirement. Over the next seven years, this amount should double to around eight lakhs.
You are obviously moving to a better-paying job, so you will be able to retain the ability to contribute the maximum to your PF account even there. In another 6 - 7 years, you should be able to save around six lakh rupees. This amount can again be withdrawn and invested.
The total of say 14 lakhs by the time you reach 58 years of age and still serving! Special FDs with any nationalized bank should give you a return of 9% PA, say approximately 1.25 lakhs PA. Even assuming that your income at that stage is taxable, if you deduct IT at 30%, it would leave you with over Rs. 80,000/- per year. That sounds reasonable.
Please bear in mind that I have not used any accurate means of calculation, so if I am a little off in the calculations, please forgive me.
Good luck to you.
Colonel Gahlot
'TRURECRUIT'
09810081197
From India, Delhi
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You have analyzed your situation very well. In fact, I don't really see the dilemma!
If you withdraw the entire fund from the current account and make a fixed deposit in a bank, or deposit in a PPF account, you will get good returns as against the small pension on retirement. Over the next seven years, this amount should double to around eight lakhs.
You are obviously moving to a better-paying job, so you will be able to retain the ability to contribute the maximum to your PF account even there. In another 6 - 7 years, you should be able to save around six lakh rupees. This amount can again be withdrawn and invested.
The total of say 14 lakhs by the time you reach 58 years of age and still serving! Special FDs with any nationalized bank should give you a return of 9% PA, say approximately 1.25 lakhs PA. Even assuming that your income at that stage is taxable, if you deduct IT at 30%, it would leave you with over Rs. 80,000/- per year. That sounds reasonable.
Please bear in mind that I have not used any accurate means of calculation, so if I am a little off in the calculations, please forgive me.
Good luck to you.
Colonel Gahlot
'TRURECRUIT'
09810081197
From India, Delhi
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Hi,
Colonel Gahlot's suggestion seems quite reasonable, and hence I appreciate it. I would also like to tell you that you can earn interest on your money at 9% p.a. in a Fixed Deposit in Syndicate Bank, or you can seek the help of any financial adviser. The second option is to purchase gold and keep it in a bank locker. Certainly, you will get good returns.
Raj.
From India, Bahadurgarh
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Colonel Gahlot's suggestion seems quite reasonable, and hence I appreciate it. I would also like to tell you that you can earn interest on your money at 9% p.a. in a Fixed Deposit in Syndicate Bank, or you can seek the help of any financial adviser. The second option is to purchase gold and keep it in a bank locker. Certainly, you will get good returns.
Raj.
From India, Bahadurgarh
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Suggest u continue your membership with PF through your prospective employer.U can transfer your funds available in your account currently to your proposed new a/c rgds sivaraman
From United States, Hillsboro
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From United States, Hillsboro
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Dear Kapil,
Withdrawal of PF will not affect the pension. Also, you have no role in the pension fund. If you have a service of 9 years and six months, you are eligible for monthly pension and no other alternative. For those who have less service will not get a pension, but may avail of a one-time withdrawal benefit.
Abbas.P.S
From India, Bangalore
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Withdrawal of PF will not affect the pension. Also, you have no role in the pension fund. If you have a service of 9 years and six months, you are eligible for monthly pension and no other alternative. For those who have less service will not get a pension, but may avail of a one-time withdrawal benefit.
Abbas.P.S
From India, Bangalore
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