March 05 , 2013
You could be one of thousands of salaried employees who left previous job and forgot about your EPF. Or you could be among the few who came across articles on dormant EPF account not earning interest and wanted to transfer the amount in your EPF account many times but finally did nothing.
This is a quick guide on what to do with your EPF account if your account has been inoperative for a long time. Since some readers might not be sure what makes an EPF account dormant we will begin with that.
EPF account gone inoperative?
If no contributions have been made to your EPF account for 36 continuous months or more the EPF amount is transferred to an inoperative account. From financial year 2011-12 no interest is paid for such inoperative accounts.
Typically your account could have inoperative if you switched your last job at least 3 years back. If you did not transfer your EPF account to your active account with new employer or close the old account your PF deposit is a dormant one.
What can be done with inoperative EPF account?
There are 2 things you can do. Either integrate old EPF account with an active account or close the account.
i. Withdrawing EPF balance on changing job
This might come as a surprise to some, but as per rules closing EPF account or withdrawing from EPF is allowed only in circumstances where the account holder has been unemployed for 2 months. However most people actually withdraw their PF deposit rather than transfer to the new account.
Of course nobody would land at your door the following week if you withdraw from PF account but it's more of a matter of doing what's right. And it is right to not withdraw because PF is meant to build a post-retirement corpus. Investment for a period as long as 30, 20 or 15 years ought to be allowed to compound.
For now it will suffice to remember that in case you withdraw before completing 5 years all income tax benefits you might have availed on EPF will be cancelled.
ii. Transferring old EPF account to a new one
Though we should say it involves more hassles, on changing job for new employment this is the only legally correct option you have- to transfer and integrate with new EPF account. You can talk to HR of the current company about this. Form 13 is to be filled with details of previous employer and submitted to the HR. make sure you fill in correct details such as dates of leaving previous employment, joining new employment, address of previous employment, EPF account number with previous employer. If there is any mismatch your application could be rejected and you'd have to start all over again.
That's it. The rest is the HR's job! They will forward it to EPF office that will get in touch with regional office of previous EPF account. It will take at least a month for the process to get completed (you'd be lucky if it got done by a month's time).
On transferring to new account you would be entitled to receive balances in previous account along with interest. If have left previous job the best thing to do with your EPF account is to transfer it to the new account. You would continue earning interest on your previous balances and compounding would go a long, long way in creating a good retirement corpus for you.
EPFO being an autonomous trust under the Ministry of Labour leaves a lot to be desired in terms of service provided. However they are in the process of providing unique identification numbers to EPF account holders which should make integration process less hassled.