According to the Employees’ Provident Fund (EPF) Act, to claim his/her final provident fund (PF) settlement, one has to retire from service after attaining 58 years of age. The total EPF balance includes the employee’s contribution and that of the employer, along with the accrued interest. Further, he will be eligible to get the Employees’ Pension Scheme (EPS) amount as well depending on the years of service.
But what if someone decides to quit his job before reaching 58? Under the existing rule, employees who resign from a job before they turn 58 years of age can withdraw the full PF balance (and the EPS amount depending on the years of service), if he/she is unemployed for 60 straight days (two months) or more after leaving a job.
As per the current rules, if an individual remains unemployed for one month he/she can withdraw 75% of his/her EPF corpus. The balance 25% can be withdrawn if the member remains unemployed for more than two months.
With regards to EPS, the lump-sum withdrawal amount is allowed if the service period is less than 10 years. If the total years of service period exceed 10 years, then he/she will be given certificate of pension. This certificate mentions pensionable service, pensionable salary and the amount of pension due on the exit of employment.
Before you start the withdrawal process make sure all your previous PF accounts are merged into one. The total service in the present establishment as well as previous organisations will be taken into account and therefore, it is advisable to merge your accounts. To read about how to merge all previous PF accounts, click here.
The withdrawal process
To withdraw the PF balance and the EPS amount, the EPFO has launched a ‘composite form’ to take care of withdrawals, transfer, advances, and other related payments. The withdrawal process becomes simpler and less time-consuming if you have your Aadhaar number with you. This is because if your Universal Account Number (UAN) is linked to your Aadhaar number, the process can be done online on the Member e-Sewa portal.
On the other hand, if you do not have Aadhaar number or your UAN is not linked with Aadhaar, then you will be required to visit your EPFO office to submit the withdrawal claim from your EPF account.
To avoid visiting the EPFO office to submit withdrawal claim, here are four ways to link your UAN with Aadhaar.
How to start the withdrawal process
Here is how you can initiate the withdrawal both with and without Aadhaar.
Withdrawing without using Aadhaar card number: If you don’t have an Aadhaar, but have the PF number, use this form – Composite Claim Form (Non-Aadhaar). Remember, you will be required to visit regional EPFO office to submit the duly filled form along with cancelled cheque of your bank account. As per the instructions mentioned on the form, you are not required to submit any documents along with the form.
You will have to furnish Permanent Account Number (PAN) if the total service period is less than five years and also attach two copies of Form 15G/15H, if applicable. In case the UAN is not available, you can mention only the PF account number.
Withdrawing using Aadhaar card number: If your UAN is already linked to the Aadhaar, then you can submit the withdrawal claim online on the Member e-Sewa Portal or by visiting the regional EPFO office along with duly filled this composite form. Remember your UAN must be activated before you log into your account on the EPFO portal.
If you are planning to visit the EPFO office to submit the duly filled form, then ensure that you have submitted complete details in Form11 (New) to your employer, Aadhaar card number and bank account details are available on the UAN portal, and the UAN has been activated.
For filing claim on the online portal, login to your account and go to online services and select claim option.
Withdrawal in different situations
Withdrawal of PF and EPS can be in any of the following situations. See which one fits you and choose the form accordingly.
1. Withdrawing PF balance plus EPS amount (for below 10 years of service)
2. Withdrawing PF balance plus EPS amount (over 10 years of service)
3. Withdrawing PF balance only and reduced pension (age 50-58; over 10 years of service)
4. Withdrawing PF balance only and full pension (After 58)
1. Withdrawing PF balance plus EPS amount (for below ten years of service)
If service period has been less than 10 years, both PF balance and the EPS amount will be paid. To get EPS amount, in the Composite Claim Form (Aadhaar or Non-Aadhaar), along with choosing ‘Final PF balance’, also choose the ‘pension withdrawal’ option.
If you plan on re-joining the workforce, you may opt to get the ‘scheme certificate’ by furnishing Form 10C.
2. Withdrawing PF balance plus EPS amount (over ten years of service)
If you have already completed 10 years of service, the EPS amount cannot be withdrawn and only the scheme certificate is to be issued by filling Form 10C along with the Composite Claim Form (Aadhaar or Non-Aadhaar). Pension is to be paid from age 58 while a reduced pension can be paid from age 50. One may opt for early pension (reduced proportionately) after 50 years, provided one has completed 10 years of service.
3. Withdrawing PF balance and reduced pension (age 50-58) (over ten years of service)
You can only get pension after turning 50 years of age and have rendered at least 10 years of service. If your service period has been more than 10 years and you are between the age of 50 and 58, you may opt for reduced pension. For this, Form 10D has to be submitted along with the Composite Claim Form (Aadhaar or Non-Aadhaar).
4. Withdrawing PF balance and full pension (After 58)
After 58, you have to submit the same Form 10D to claim the full pension.
To know more about EPS, scheme certificate and pension calculations, click here.
What you should do
It is advisable to transfer your PF balance when you change jobs as it is a form of forced savings. For those who are still in service and have not started their own business, it is better to transfer the PF balance to the new employer. The transfer process has been made automatic, click here to know about it. And if you have quit to start your own business, the entire balance in your EPF account can be transferred to the National Pension Scheme.
However, if you are planning to keep the EPF corpus untouched then remember that after leaving job, the interest earned on the balance will be taxable in your hands. This is because in November 2017, the Bengaluru bench of the Income-Tax Appellate Tribunal (ITAT) ruled out tax-exemption on the interest earned on EPF account after an employee has quit. So, to avoid the interest getting taxed, you will have to either transfer the PF balance to your new employer or withdraw the amount at the earliest after the exit.
