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Changing jobs is a common thing among salaried employees working in the private sector, but in this rush of career, neglect of financial and provident fund related records often becomes a burden. As soon as most of the employees join a new company, they either withdraw money from their old provident fund i.e. EPF account or rest assured by simply transferring the PF balance to the new account. They think that all their work has been completed, whereas in reality they forget to transfer the most important part of their retirement security i.e. Employees Pension Scheme (EPS) records. As per the rules of the Employees Provident Fund Organization (EPFO), the PF contribution deducted from your salary is divided into two separate parts, with one part deposited in EPF and the other part in EPS. When you just transfer PF money or withdraw it in case of emergency, the service record of the pension account is not automatically transferred unless you follow the prescribed procedure for the same. If you do not link the service history of the old companies with the new UAN or the current member ID, then in future the monthly pension received at the time of old age may get permanently eclipsed.
Under EPFO rules, 12 percent of the basic salary and dearness allowance (DA) of any organized sector employee is deducted in the EPF account. The employer i.e. the company also contributes an equal contribution of 12 percent to the employee’s account, but out of this 12 percent contribution of the employer, 3.67 percent goes into the employee’s EPF account and the remaining 8.33 percent (up to the maximum statutory limit of Rs 1,250 per month) is deposited directly into the Employee Pension Scheme i.e. EPS-95. This simply means that EPF money is your savings which gets compounded interest every year and which you can withdraw when needed, but EPS money is not a normal savings account but it is your lifetime pension fund. You do not get interest on the amount deposited in the EPS account, rather your total service period i.e. ‘service length’ is recorded in it. When an employee changes jobs and does not transfer the EPS service of the old company to the new company, his previous service period in the records of EPFO may be considered as nil or incomplete.
The most basic and steadfast rule of the Employee Pension Scheme (EPS) is that it is mandatory for any employee to complete minimum 10 years (120 months) of eligible service to get lifetime monthly pension after completing 58 years of age. Suppose you worked in the first company for 4 years, in the second company for 3 years and in the third company for 5 years; If you keep transferring your EPS service during all these jobs, your total pension service will be counted as 12 years and you will become validly entitled to receive monthly pension throughout your life. On the contrary, if you do not link the service records every time you change jobs and the records of previous companies remain scattered, then none of your jobs will cross the 10 year limit in the EPFO system. In such a situation, instead of getting the benefit of monthly pension at the age of 58, you will get back only a nominal lump sum, which will prove inadequate in the face of rising inflation in old age. By transferring service, your previous service period gets added to the new service and no non-contributory break in service is considered.
Many times, after leaving the old job due to financial constraints or other priorities, employees withdraw their entire EPF fund by filling Form 19. The biggest confusion here is that when the PF money has been withdrawn, what is left to transfer? Experts clearly say that even if you have withdrawn PF money after working for less than 10 years, you should still keep your pension service history alive and obtain ‘Scheme Certificate’ through Form 10C or add service in a new job. If you withdraw even a lump sum amount of EPS before completion of 10 years of service, your entire service period lapses forever and the countdown of your pension service in the next job will start again from zero. Therefore, it is wise that if there is no compulsion, then instead of withdrawing the EPS money, always keep transferring its service history to the new company so that the milestone of 10 years can be completed easily.
In the era of Digital India, EPFO has made the entire process of service transfer completely paperless and transparent. For this you do not need to visit any old office. First of all, login to EPFO’s ‘Unified Member Portal’ with the help of your 12 digit UAN and password. After login, go to ‘Online Services’ tab and click on ‘One Member – One EPF Account (Transfer Request)’ option. Here the details of your current appointment will appear. After this you will have to enter your old member ID and choose whether you want to get the claim attested from your previous company or the present company. As soon as you enter the Aadhaar based OTP, your online transfer request will be registered. Through this single request, not only your EPF balance is transferred, but the complete details of your old EPS service are also transferred to the new PF account through system generated Form 13 (Annexure-K).
If an employee is not able to get another job immediately after leaving one job, or is taking a break of a few years due to higher education, startup or family reasons, then ‘Scheme Certificate’ proves to be a boon. Employees can apply for scheme certificate through EPFO Form 10C. This certificate is a permanent government document as to how many months or years you have contributed to EPS. Whenever you start working in the organized sector again in future, you can get your entire previous service directly added to the new account by handing over this certificate to the new company. It also provides security of immediate family pension to the family or dependents of the certificate holder in case of untimely death.
The monthly pension received under EPS is determined by a fixed formula: (Pensionable Service × Pensionable Salary) / 70. In this formula, ‘Pensionable Service’ is directly related to your total transferred years. If the total certified service of an employee exceeds 20 years or more, EPFO provides him 2 years of bonus weightage as per the rules, which leads to a huge increase in his pension amount. If you do not get the service transferred and your service remains only 18 years on paper instead of 20 years, then you will not only get less years of pension but will also lose 2 years of additional bonus benefits forever. Apart from this, if the service record of all your accounts is not integrated, then while filling the pension claim (Form 10D) at the age of 58 years, the claim will be repeatedly rejected in the field office of EPFO and it will become impossible to collect the documents of the old closed companies for verification. Therefore, become an aware employee and get the EPS records of your every old job transferred in time.