Provident fund is a benefit that is available to all salaried employees. It is one of the most beneficial and popular investment tool introduced by the government for salaried individuals both in public sector and private sector. Provident Fund is the pool of funds that is created by saving a small percentage of your salary every month and deposited with Employees Provident Fund Organization of India. These contributions made by individuals attract compounding interest on yearly basis. It is mandatory for all companies in India who employ 20 or more employees to be registered with Employees Provident Fund Organization.
Calculation of Provident Fund on Salary
Provident Fund is created to propagate the idea of saving a fraction of salary for financial security and stability. An individual can start his contributions in Provident Fund once he has started working at any establishment as an employee. These Provident Fund Contributions are on a monthly basis. Individuals have to pay a fraction of their salary every month towards PF contributions. This money that is saved can be used by the individuals in event of retirement or if an individual is no longer fit to work.
Let us now understand how the Provident Fund is calculated on salary. There are two important factors that are to be considered before understanding the calculations.
- EPF account: EPF stands for employee provident fund. This is the provident fund account wherein the funds of contributions made by the employee and employer are pooled.
- EPS account: EPS stand for Employee Pension Scheme. This is the account where the employer makes a fraction contribution out of the total fraction that is supposed to be contributed by the employer.
The fraction of provident fund that is deducted from the salary is 12%. This means that both employer and employee respectively contribute 12% to the Provident Fund account. It is important to note that the employee contributes the entire 12% of his salary fraction to the EPF account while the employer contributes only 3.67% in your EPF account and the remaining of 8.33% is contributed in your EPS account by your employer. Thus employers’ contribution of 12% is split into two parts: 3.67% in employees provident fund account and remaining 8.33% in employee pension scheme account.
Benefits of Provident Fund
Provident Fund is a very important investment that every individual makes. It is a financial arrangement done for the future needs. Provident fund investment ensures a good growth of your money as you earn compounded interest on it and another important aspect is that the interest that you earn on the provident fund is tax free. So if an individual does not withdraw money of Provident fund or withdraws it after a very long period, say at his/her retirement then the maturity amount would be huge and one would get a lump sum amount.
Ways to Transfer EPF Balance
The EPF organization recognizes you through your employer but what happens when you switch jobs? In this case, individuals often resort to withdrawing their Provident Fund when they switch jobs as they are unaware of the EPF transfer procedure. Many individual are still unaware of the EPF transfer procedure which is made easily available by the EPFO.
The EPFO has come a long way and given options to the members to opt from for carrying out the PF transfer process. The EPFO has introduced new methods to expedite the process but have not yet closed the existing way of transferring PF. If an individual is proficient with computer and technology then he/she can opt the online process of EPF transfer else one can anytime go ahead with the existing offline channel. Let us understand all ways in which one can transfer EPF balance.
- Offline Channel for PF Transfer: This is the traditional method which includes form filling. In this offline channel of EPF transfer, an individual is required to fill in the printed form (form 13) in a detailed manner and submit it to the current employer. Present employer forwards and submits the same to EPF office. EPF office sends the form to the applicant’s previous employer for verification and attestation. On receipt of verified and attested copy from the previous employer, the EPF office transfers the balance from previous EPF account to a new EPF account. In this offline transfer, the applicant does not need to furnish UAN and Aadhaar card number. UAN (Universal Account Number) is allotted by EPFO and it acts as a single identification number for multiple employee IDs allotted to the same individual. The major advantage of offline channel is that even if there is any discrepancy in the details of the applicant, the applicant can still apply for PF transfer by submitting a duly attested rectification form along with the application form. This rectification form must be attested by the employer who had pointed out the error in the details of the applicant. While on the flipside in offline method of EPF transfer, it includes a lot of physical movement of the EPF forms and documents and so the process is a tad lengthy.
- Online Channel for PF Transfer: The online transfer claim portal ensures transfer of Provident Fund from one account to another in a timely manner. This online EPF system is a boon for every working individual. Now-a-days with digitization of EPFO, this method of EPF transfer has become easy and safe. This is becoming the preferred mode for EPF transfer. In this mode, the whole process is online from filling up of form to verification and authentication by employer everything is done at the click of a button. There is no physical exchange of EPF documents between employer to EPFO or vice versa. Also the transfer of EPF is done electronically. This online channel of PF transfer has many benefits some of which can be stated as under:
- Less time consuming
- Online process is simple and hassle free as the forms do not travel from one office to another.
- Individuals opting for online PF transfer can view the status of EPF transfer.
- Online process is fast as against the physical channel.
- Online process for PF transfer promotes transparency as the applicant knows and can view the status of his application.
So, if you are opting for online channel for PF transfer, there are options available as to how you want to avail the transfer process.
Options in Online transfer of PF
Following are the options in which you can opt for online transfer of PF they are as under:
- Online Transfer Claim Portal (OTCP)
- One Employee, one EPF account
- The Automatic EPF Balance Transfer
While choosing the method in online PF transfer, it is obvious that the applicant will choose the easiest option but there are certain check points that the applicant should satisfy before choosing any method of his choice. Also, the chosen method should be available for the applicant. So let us discuss every option in detail.
- Online Transfer Claim Portal (OTCP): The EPFO system has introduced “Online Transfer Claim Portal” for easing the hassle of transferring and withdrawal of provident fund and imparting transparency and faith in the EPFO system. This is an easy way of EPF transfer. This process does not require UAN or Aadhaar Card or any other documents. Let us have a look at the process of transfer through Online Transfer Claim Portal.
Process and essentials for Online Transfer of Provident Fund
- Before initiating the online process for transfer of Provident Fund from previous employer to current employer, it is imperative on the part of these organizations to have their digital signatures registered with EPFO as the verification and attestation of all documents is done online with the help of digital signatures.
- Even if any one of your previous or current employer has a digital signature then the transfer of your fund online can be carried out.
- For knowing that whether your employer is registered with EPFO or not, you can quickly identify it by running eligibility check of your employer on www.epfindia.gov.in
- After running the eligibility check, you have to register yourself as the member on the portal.
- Now, fill EPF transfer claim form.
- While filling EPF transfer Claim form, you will need to keep some information handy like:
- EPF account number of both employer i.e. EPF account number of both previous and current employer.
- Details like date of joining and resignation date with the previous employer.
- Date of joining with the current employer.
- Bank details like account number, bank name, bank branch and IFSC code. These details are required in case you wish to withdraw your money.
- After punching in the EPF account number of the previous employer, the EPFO automatically fills the name of your previous employer and gives the details of the regional provident fund office that maintains the account of your previous employer.
- Then to validate the authenticity of the person carrying out the online transfer, the EPFO asks you to enter date of birth of the employee. If you enter wrong details for 3 times then the EPFO will block you and you will not be able to carry of online transfer of Provident Fund.
- After filling of the EPF Transfer Claim form, select either of the employers to verify and attest your forms. Note that if the attestation is done by the previous employer, then the process of transfer of PF would be fast paced.
- After selecting the employee, take the print out of the form and submit the same with the employer who you chose for attestation.
- After filling of the form, one can review and submit the complete form.
- After the final submission, take print out of the form, sign it and submit it to the employer as the employer prefers to keep a copy of the same for their record. Submission of the form should be done on an immediate basis as the employer can reject the EPF transfer claim, if the delay is more than 15 days
The above method is quick, efficient and works fast if the employer is efficient in managing the transfer request and does not have apprehension towards transparency of the process.
- One Employee, One EPF account: One Employee, One EPF account is the easiest EPF transfer method introduced by EPFO. It is the drive started and carried out by EPFO. EPFO calls this method as an EPF consolidation exercise as there exists multiple data of same individual member with EPFO. So with One Employee, One EPF account, EPFO is merging all the multiple existing EPF accounts of the member and bringing it under one umbrella. This is achieved by allowing the members to apply for more than one EPF transfers. Before opting this method, the applicant should fulfill the below stated criteria.
- Link UAN with Aadhaar card
- The linked Aadhaar card must be authenticated by the employer
- Note that your personal details should match with those on your Aadhaar Card
- Your bank details are updated with EPFO
- Your personal details match with the records available with EPFO.
- Also, if you are applying for multiple EPF transfers then the personal details like DOB, father’s name etc. should be same for all the EPF accounts.
So if all the above stated criteria are fulfilled then the EPF transfer process is easy and hassle free.
- The Automatic EPF balance Transfer: This method of EPF transfer is applicable where the transfer of PF is to be done from relatively new EPF accounts as this method uses UAN number and the newer EPF accounts come with an UAN number. In this method, the applicant must fulfill the following conditions:
- Applicant should have UAN Number before joining with new employer
- Furnish UAN number to the employer at the time of joining
- All the personal details of the applicant should match while carrying out PF transfer process.
- This process does transfer of EPF from multiple accounts.
Thus in this method the applicant does not have to explicitly do anything for transfer of PF. It gets transferred as soon as the UAN is punched into the system by the new employer.
EPF Transfer Status
EPF transfer status can be viewed online. In the Online method, the whole process of transfer can be seen online whereas if the form is submitted physically then the status can be checked once the form reaches the EPF office.
Online status can be checked by logging into the Online Transfer Claim portal. Other option is checking the status on “EPF Claim status check” page available on EPFO website. If the applicant is not happy with the service and is unsatisfied with the status then the applicant can use EPF Grievance Portal to know the exact status of the transfer claim.
Thus we have seen the various methods used in transferring of EPF from one EPF account to new EPF account of the applicant in event of job change. You can choose any method as per your need and convenience.