Employee Pension Scheme: Hearing is currently going on in the Supreme Court regarding the upper limit of Employee Pension Scheme. The pension amount may increase in the coming days. But, what are the EPFO rules for this?
Employee Pension Scheme: In the Budget 2021, there has been a change in the rules regarding the contribution of Provident Fund. Now the government will levy tax on the interest earned on contributions above Rs 2.5 lakh annually. It is generally believed that provident fund is absolutely tax free.
but it’s not like that. EPFO has its own rules, in which provident fund withdrawal happens only with certain conditions. Contribution is taxed for the first time, but withdrawal has been taxed in the past as well. This is what happened to the Provident Fund. But, the most common salaried person suffers from pension (EPS pension)… because, its rules are completely different.
What happens to the pension fund?
Can the funds deposited in pension be withdrawn? Actually, your money is deposited in Employee Provident Fund (EPF) in two types of schemes. The first is the Provident Fund (EPF) and the second is the Pension Fund (EPS). 12 percent of the basic salary of the employee is deducted from his salary and the same contribution is given by the company. The entire 12% of the employee gets deposited in EPF. At the same time, the company’s share is put in two pieces. The first 3.67% gets deposited in EPF and the remaining 8.33 percent gets deposited in Employees Pension Scheme EPS.
What is the rule for Provident Fund?
As per EPFO rules, partial withdrawals can be made for the purpose of marriage of the child, higher education and purchase of a house. A member can withdraw 75 percent of the amount only after one month of leaving the job. After 2 months, the remaining 25% can also be withdrawn. Earlier, PF could be withdrawn only after two months in case of leaving the job or becoming unemployed.
What are the rules for pension?
If you want to withdraw EPF amount, then you can withdraw the amount deposited in your account anytime. Whether your job is 6 months or 10 years. But, you may face some difficulty to withdraw the pension amount. Because, there are many rules for this, which you should understand. Let us know what can be done with the pension amount in different situations?
What will happen to pension in case of PF transfer?
According to EPFO Enforcement Officer (Retd) Bhanu Pratap Sharma, if you transfer your Provident Fund (PF) from one account to another, then irrespective of your service history, you can withdraw the pension amount at any time under any condition. Can’t take it out. Because, only PF amount is transferred from the transferred account and you can withdraw only PF money.
The pension amount is added to your service history. This means that even if your service history becomes 10 years while working in different places, then you will become entitled for pension and at the age of 58, you will start getting some salary in the form of monthly pension.
Can I withdraw pension money if the job is less than 6 months?
If your job is less than 6 months, that means less than 180 days of duty, then you will be able to withdraw only PF amount. But, you will not get the amount deposited in the pension. Because according to the rules of EPFO, you cannot withdraw pension money in less duty service of 180 days.
Can I withdraw pension money if the job is more than 9 years 6 months?
If your job has been more than 9 years and 6 months, then you will not be able to withdraw the pension amount along with your PF. Because, 9 years 6 months service is considered equal to 10 years. According to the EPFO rules, if your job turns 10 years old, then you become entitled for pension. After this you will start getting the benefit of monthly pension at the age of 58. This means that you will get lifelong pension, but you will not be able to withdraw part of the pension before retirement.
When and how can I withdraw pension money?
If your job is more than 6 months and 9 years is less than 6 months, then you can withdraw pension amount along with your PF amount by submitting Form 19 and 10c. But, for this you will have to apply in the PF office manually. The facility of withdrawing pension funds in the online process has not been started yet. After filling the form, they will have to be submitted in the office of the employer ie EPFO itself.
Will pension be available on retirement after withdrawal?
If you withdraw part of pension in case of less than 9 years 6 months then remember you will not be entitled for pension after that. Because withdrawing pension money with PF means Full & Final PF settlement and in such cases your PF account number is completely closed. Because of this, you cannot take advantage of pension facility for your retirement.
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