Hi All,
We have a few employees in our BPO organization who have completed 10 years of service. They are expressing their desire to quit the company and re-join as new employees to avoid their funds from being migrated towards pension once they complete 10 years of service.
Please provide insights so that we can better address the employees' concerns and assist them accordingly.
Additionally, if possible, could you outline how I can calculate and show them their EPF & Pension fund details, including the interest amount, accrual, and any other relevant information to support their case?
Thank you in advance for your suggestions and assistance in this matter.
Regards,
Selvi G
From India, Bangalore
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We have a few employees in our BPO organization who have completed 10 years of service. They are expressing their desire to quit the company and re-join as new employees to avoid their funds from being migrated towards pension once they complete 10 years of service.
Please provide insights so that we can better address the employees' concerns and assist them accordingly.
Additionally, if possible, could you outline how I can calculate and show them their EPF & Pension fund details, including the interest amount, accrual, and any other relevant information to support their case?
Thank you in advance for your suggestions and assistance in this matter.
Regards,
Selvi G
From India, Bangalore
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Dear Selvi G,
Please go through the following discussion. It will help you understand the issue.
URL: https://www.citehr.com/474364-eligibility-pension-under-epf-act.html
Thank you.
From India, Delhi
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167Please go through the following discussion. It will help you understand the issue.
URL: https://www.citehr.com/474364-eligibility-pension-under-epf-act.html
Thank you.
From India, Delhi
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Hi Selvi,
First of all, according to the EPF Act, once a PF account is opened, it cannot be closed and opened again for an individual. It is only possible when he quits employment and does not join within two months any organization where the EPF Act is applicable. Then, he can withdraw his amount. Furthermore, if he again joins an organization where the Act is applicable, then his new account will be opened.
Secondly, I know your pain. A lot of employees jump in to withdraw their funds in between the service. According to my experience, the only reason behind this is insecurity. To counter this, you must issue them PF slips every year. The slips can be obtained through EPF offices or can be downloaded online.
Tell me if you require any further assistance.
Thanks,
Manish Gupta
From India, Patiala
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First of all, according to the EPF Act, once a PF account is opened, it cannot be closed and opened again for an individual. It is only possible when he quits employment and does not join within two months any organization where the EPF Act is applicable. Then, he can withdraw his amount. Furthermore, if he again joins an organization where the Act is applicable, then his new account will be opened.
Secondly, I know your pain. A lot of employees jump in to withdraw their funds in between the service. According to my experience, the only reason behind this is insecurity. To counter this, you must issue them PF slips every year. The slips can be obtained through EPF offices or can be downloaded online.
Tell me if you require any further assistance.
Thanks,
Manish Gupta
From India, Patiala
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Dear Gupta Ji,
Sorry to say, but I do not agree with your view that "insecurity is the main reason behind this matter."
In the discussion, Mr. Selvi has clearly mentioned that the employees who have completed 10 years are approaching for this. Therefore, insecurity could not be the right reason for this.
In my experience, I would like to say that the employees make this decision themselves after the guidance of their colleagues. They set their minds not to opt for the Pension Scheme as the pension fund is paid to them as pension only after 50/58 years of age, and the amount is also less. So, they withdraw the EPF Fund before completing 10 years of service.
Dear Selvi,
I would like to suggest to you that here you need to counsel your employees and inform them that if they go for this option, then they cannot re-join the organization before 2 months, to fulfill the unemployment clause for withdrawing the Fund.
I have observed that some members also suggest keeping such employees off-roll for a due period to avail them of this facility, which is wrong.
So, try to convince them and explain the benefits of the EPF Fund and Family Pension Fund. Inform them that the pension fund will work as a security fund for their family, and the pension amount depends on the length of their service. The longer their service, the higher the pension amount. Therefore, just continue with the scheme and try to add more service tenure within the scheme. It will increase their PF Fund due to the higher interest rate, monthly pension amount due to long service tenure, gratuity amount due to long service tenure, and many more benefits. Therefore, inform them that just due to misguidance, they are going to lose so many benefits.
From India, Delhi
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Sorry to say, but I do not agree with your view that "insecurity is the main reason behind this matter."
In the discussion, Mr. Selvi has clearly mentioned that the employees who have completed 10 years are approaching for this. Therefore, insecurity could not be the right reason for this.
In my experience, I would like to say that the employees make this decision themselves after the guidance of their colleagues. They set their minds not to opt for the Pension Scheme as the pension fund is paid to them as pension only after 50/58 years of age, and the amount is also less. So, they withdraw the EPF Fund before completing 10 years of service.
Dear Selvi,
I would like to suggest to you that here you need to counsel your employees and inform them that if they go for this option, then they cannot re-join the organization before 2 months, to fulfill the unemployment clause for withdrawing the Fund.
I have observed that some members also suggest keeping such employees off-roll for a due period to avail them of this facility, which is wrong.
So, try to convince them and explain the benefits of the EPF Fund and Family Pension Fund. Inform them that the pension fund will work as a security fund for their family, and the pension amount depends on the length of their service. The longer their service, the higher the pension amount. Therefore, just continue with the scheme and try to add more service tenure within the scheme. It will increase their PF Fund due to the higher interest rate, monthly pension amount due to long service tenure, gratuity amount due to long service tenure, and many more benefits. Therefore, inform them that just due to misguidance, they are going to lose so many benefits.
From India, Delhi
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Please don't do this; if they lose the continuity of service, it would adversely affect the gratuity amount, which means 10 X 15 days' salary as per the Gratuity Act. Not only that, seniority, promotions, leave, and other years of service-related benefits also vanish. Caution them on these dangers.
From India, Bangalore
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From India, Bangalore
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I agree to the above. There is no use in getting PF withdrawal prior to retirement as, upon leaving the company, one may lose the employer's share as well. It is better to transfer the PF to the other company where he is joining.
Regards,
Chander S. Sharma
From India, Patiala
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Regards,
Chander S. Sharma
From India, Patiala
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Dear Selvi G,
It gives us the impression that Employees' Pension is available after 10 years of service. However, there is another condition that the pension is receivable only after the age of 50 and above. In short, 10 years of service is a primary condition, and after that, the age requirement is 50 years and above. Please remember that those who have not reached 50 are not eligible for any pension, even if they have completed 10 years of membership.
The idea of withdrawing PF and rejoining the company is not advisable, as it will not provide any additional benefits. Instead, you may lose the continuity of service and the benefits that come with it.
Please let me know if you need any further clarification or assistance.
Best regards,
[Your Name]
From India, Kolhapur
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It gives us the impression that Employees' Pension is available after 10 years of service. However, there is another condition that the pension is receivable only after the age of 50 and above. In short, 10 years of service is a primary condition, and after that, the age requirement is 50 years and above. Please remember that those who have not reached 50 are not eligible for any pension, even if they have completed 10 years of membership.
The idea of withdrawing PF and rejoining the company is not advisable, as it will not provide any additional benefits. Instead, you may lose the continuity of service and the benefits that come with it.
Please let me know if you need any further clarification or assistance.
Best regards,
[Your Name]
From India, Kolhapur
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It is not a wise idea. If I stop to be polite, I would say it is foolish.
First thing, 10 years of minimum contribution towards EPF pension scheme makes an employee eligible for pension. But on attaining 58 years of age (50 mentioned by somebody is for reduced pension, and this option also will be withdrawn shortly). No benefit will accrue to an employee by resigning and rejoining. In fact, as pointed out by others in this forum, you stand to lose on many counts. I would say that this will be an injustice to your family because the EPF accumulation is tax-free at entry and exit, and at the end of service, the accumulated amount will be substantial. Don't deprive your family of this. Most of these employees may be needing some tax-saving schemes in any case. Also, remember that the cumulative interest you get on this is good, currently 9.25% or so. There is no tax-saving scheme better than this, except a housing loan.
The pension is calculated by Pensionable service x Pensionable salary (limited to Rs 6500) / 70. This is for those who have joined after 16 Nov 1995 (when the pension act came into effect). For others before 1995, somebody else in this forum has given an excellent XL sheet. This means that more number of years will get you a better pension.
From India, Thane
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First thing, 10 years of minimum contribution towards EPF pension scheme makes an employee eligible for pension. But on attaining 58 years of age (50 mentioned by somebody is for reduced pension, and this option also will be withdrawn shortly). No benefit will accrue to an employee by resigning and rejoining. In fact, as pointed out by others in this forum, you stand to lose on many counts. I would say that this will be an injustice to your family because the EPF accumulation is tax-free at entry and exit, and at the end of service, the accumulated amount will be substantial. Don't deprive your family of this. Most of these employees may be needing some tax-saving schemes in any case. Also, remember that the cumulative interest you get on this is good, currently 9.25% or so. There is no tax-saving scheme better than this, except a housing loan.
The pension is calculated by Pensionable service x Pensionable salary (limited to Rs 6500) / 70. This is for those who have joined after 16 Nov 1995 (when the pension act came into effect). For others before 1995, somebody else in this forum has given an excellent XL sheet. This means that more number of years will get you a better pension.
From India, Thane
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