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 served for 1 year, and his salary has increased so that his basic + DA is more than 6500 while still in the same employment.
But he would still be covered under the PF Act, and contributions are mandatory at the same 12% rate, which can be reduced to 780 (12% of 6500).
Now, if he changes to a new employment (obviously with a 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 lifetime?
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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 the PF Act.
He quit that job and joined us a few years back.
We are not covered under the PF Act.
In this case, should the person who has a PF account be given a contribution for PF? Or should he 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 the PF Act in my current firm.
Now, when I join another firm for better prospects, I should be submitting some form in my 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 beneficial?
Is this not tracked?
Looking forward to further guidance. Thank you in advance for the patience and knowledge shared.
From India, Mumbai
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754A person had his first job where he was covered under PF and had basic + DA less than 6500.
Now he has served for 1 year, and his salary has increased so that his basic + DA is more than 6500 while still in the same employment.
But he would still be covered under the PF Act, and contributions are mandatory at the same 12% rate, which can be reduced to 780 (12% of 6500).
Now, if he changes to a new employment (obviously with a 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 lifetime?
============================
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 the PF Act.
He quit that job and joined us a few years back.
We are not covered under the PF Act.
In this case, should the person who has a PF account be given a contribution for PF? Or should he 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 the PF Act in my current firm.
Now, when I join another firm for better prospects, I should be submitting some form in my 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 beneficial?
Is this not tracked?
Looking forward to further guidance. Thank you in advance for the patience and knowledge shared.
From India, Mumbai
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Thank you, Saswata Banerjee,
A different point of view that was posted earlier in the forum was that after 10 years of PF contribution, the amount in the pension fund gets activated. If you withdraw before 10 years are over, you get the full amount of your and your employer's contribution back. That money, properly invested, will give you more than the pension under FPF. That is IF you invest it :)
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 the employer's contribution (which goes to the PF account) and the 8.33% of the employer's contribution that goes to the pension fund perhaps would not be handed over.
Thank you for the insight and clearing the doubts :-)
From India, Mumbai
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A different point of view that was posted earlier in the forum was that after 10 years of PF contribution, the amount in the pension fund gets activated. If you withdraw before 10 years are over, you get the full amount of your and your employer's contribution back. That money, properly invested, will give you more than the pension under FPF. That is IF you invest it :)
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 the employer's contribution (which goes to the PF account) and the 8.33% of the employer's contribution that goes to the pension fund perhaps would not be handed over.
Thank you for the insight and clearing the doubts :-)
From India, Mumbai
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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 include multiple companies you have worked for and if you have multiple accounts that have been transferred to the latest account.
From India, Mumbai
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From India, Mumbai
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I am totally confused. I think I should abreast my knowledge first. Till such time I must keep quite.
From India, Mumbai
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From India, Mumbai
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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
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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
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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
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From India, Kolkata
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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
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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
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Nishi,
I cross-checked this matter this morning when I was in a compliance review. Many people seem to have 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, they can get their PF withdrawn or transferred to another PF account, but they will lose their EPF amount. EPF is 8.33% of the employer's contribution. The PF amount, therefore, is 12% of the employee's contribution and 3.67% of the employer's contribution.
From India, Mumbai
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I cross-checked this matter this morning when I was in a compliance review. Many people seem to have 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, they can get their PF withdrawn or transferred to another PF account, but they will lose their EPF amount. EPF is 8.33% of the employer's contribution. The PF amount, therefore, is 12% of the employee's contribution and 3.67% of the employer's contribution.
From India, Mumbai
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