If you are a salaried individual and contribute to EPF scheme then you must be aware of the fact that that every month 12% of your “salary” is contributed towards EPF account. Your total monthly contribution is routed towards Employees’ Provident Fund.
Your employer also contributes 12% of the salary to your EPF a/c. But your employer’s monthly contribution is routed towards various components of PF.
(The definition of SALARY for EPF calculation is : Salary = Basic + Dearness Allowance)
Out of this 12% of your employer’s monthly contribution, 8.33% goes towards EPS (Employees Pension Scheme) and only 3.67% is invested in Employees’ Provident Fund (EPF). So, you contribute 12% of your basic salary and your employer contributes 3.6% of your basic salary towards EPF deposits.
As mentioned above, your employer contributes certain portion of your monthly salary towards EPS (Pension). You receive the pension amount from this Employees’ Pension Scheme.
The minimum contribution used to be 12% of Rs 6,500 in most of the employees’ cases, now this is 12% of Rs 15,000 pm. So, you may now be depositing Rs 1,800 towards EPF. Whereas, your employer may now be contributing Rs 550 pm and Rs 1,250 pm towards EPF and EPS (pension) respectively. (You may be drawing a very high salary, but your contribution to Pension Fund will be only Rs. 541 and after Oct 2014 it is Rs 1250 max.)
In case, you switch your job, you have to transfer the Employees’ Provident Fund balance to the new employer (assuming they offer EPF scheme). But what happens to the funds in the EPS, continues to remain a mystery for many.
The main reason for this confusion is, while the PF account of the new employer shows the transferred EPF balance, the EPS money from the previous employer wont get reflected in new PF account passbook.
So, what happens to your EPS on Transfer of EPF account? What happens to EPS when you transfer your old EPF to new/latest EPF account? Let’s discuss..
Transfer of PF on Change of Job
Earlier, when changing jobs, you were required to fill up two forms to your new employer ;
- Form 11 to declare that you are already part of Employees’ Provident Fund (EPF) schemes &
- Form 13 for getting the PF balance transferred from the earlier organisation to the new one. (Kindly note that Form 13 is for transfer of EPF balance.)
The EPFO has recently released a revised Form – 11. This new Composite Declaration Form-11 serves both purposes, provided you have an active Universal Account Number (UAN) and your Aadhaar is verified for KYC in the EPF database. (Related Article : ‘New EPF Composite Declaration Form-11 for automatic EPF Transfer on change of Job!‘)
You can also transfer PF online through UAN member portal.
Where does EPF & EPS go on change of job?
In the above EPF statement, you can find EPF contributions of Rs 1,800 and Rs 550 towards EPF (employee share & employer share respectively). The EPS contribution is at Rs 1,250. (You can download your EPF passbook from UAN member portal or through UMANG mobile App.)
You can also observe that there are transactions towards “Interest updated” in the statement as on 31st March of every year. These are the interest payouts on the total monthly contributions. There won’t be any interest payout towards EPS contributions.
Once you submit your request for PF transfer on change of job, the EPF balances get ‘transferred in’ to your new EPF account. But the EPS column shows zero addition.
Where did your EPS balance of your previous EPF account go?
While service details are transferred from an older to a new account, the EPS amount is retained in the older account. The PF passbook of your previous organisation reflects the EPS amount and your current EPF account (under Service history tab of UAN portal) reflects the carried forward service period.
Transfer of service details helps you to keep a track of number of years of work you have put in. So if you are in your third job, and have consolidated your EPF in your new account, your EPS amount for the two earlier employers will reflect in the respective PF passbooks only.
EPS withdrawal & Options
Below are the options for EPS withdrawals ;
- If you have worked for less than 10 years and have been unemployed for more than 2 months then you can withdraw entire EPS balance (through Form 10c) along with EPF balance (Form 19).
- If you have worked for more than 10 years then you can not withdraw full EPS balance. You can apply for Pension which starts either at 50 (early pension) or 58 years of your age.
- In case, you resign from a job and join a new employer who does not offer EPF scheme then you can either withdraw EPS balance (if service history is less than 10 years) or apply for Scheme Certificate from EPFO.
- You can submit this certificate when you join an EPF-covered organisation in future. If you do so, your service history gets carried forward.
- If you don’t join an organisation and reach 50 or 58 years of age, you can submit these certificates (if employed with multiple employers) to the EPF field office under whose jurisdiction your last employer was covered and apply (Form 10D) for monthly pension.
- In case, you resign from your current job and join a new organization where EPF scheme is offered, you can just submit Form-11 form to your new employer. Under this scenario, your EPF and EPS get transferred.
I hope you find this post informative. Kindly share your comments or queries (if any). Cheers!
Continue reading :
- EPF Interest Income & Withdrawals | Tax Implications | Is EPF Interest taxable?
- How is interest on EPF account calculated?
- How to withdraw EPF online? (Process Flow & Eligibility Conditions)
(Post first published on : 29-May-2018)