look news india
New Delhi: For employed people working in the private sector, Employees Provident Fund (EPF) is the biggest support in old age after retirement. Every month, a fixed amount is deducted from the employee’s salary and goes into the PF account and the company (employer) also deposits the same amount on its own behalf. Although the rules of EPFO are completely transparent, still many misconceptions remain in the minds of crores of employees regarding PF, pension and retirement age. Today, let us remove those 5 big confusions of yours forever, about which it is very important for you to have correct information.
1. Retirement age is not 60 but 58 years
The biggest misconception is that people consider the retirement age in EPF to be 60 years. According to Kunal Kabra, founder of Custodian Life, under the rules of EPF, the official retirement age has been fixed at only 58 years. As soon as you turn 58, PF contribution stops coming into your account, even if you continue your job.
2. The truth of interest stopping after retirement
Often employees feel that as soon as they retire, interest on the money deposited in PF stops. This is completely not true! According to the rules, if an employee retires at his official age of 58 years, he continues to receive interest on his EPF balance for the next three years (i.e. at the age of 61 years).
3. What are the interest rules on Early Retirement (VRS)?
If you take retirement before 58 years, then the 3 years rule of getting interest does not apply. In case of early retirement, you will continue to get interest till you complete 58 years of age. For example, if you leave your job or retire at the age of 45, you will continue to get the benefit of interest for the next 13 years (till the age of 58).
4. Does the account get closed when there is a gap in job?
Many times, due to loss or change of job, money is not deposited in the PF account for a few months. People get scared that their account will become inactive. As per EPFO rules, such ‘non-contributory period’ does not count towards pensionable service, but your account does not get closed immediately. EPF account falls into ‘inoperative’ category only when no contribution has been made in it for 3 consecutive years.
5. Pension starts as soon as you turn 58
The most important confusion is regarding the Employees Pension Scheme (EPS). People think that pension benefits will be available only after leaving the job. The reality is that as soon as you turn 58, your EPS pension starts and you get it every month throughout your life. This has nothing to do with your working status. Whether you are retired or still working, your pension starts once you cross the age of 58.
