Why salaried employees should transfer their EPF balance after switching jobs?

Have you changed multiple jobs? And now you are wondering as to whether or not you are required to transfer your earlier EPF balances accumulated with different employers to your new employer, or whether doing so is mandatory?

While there is no mandate requiring EPF transfers when switching jobs, it is in the interest of EPF subscribers to transfer their balances to the new employer.

Importantly, the Employees’ Provident Fund Organisation (EPFO) introduced the Universal Account Number in 2014, which serves as an ‘umbrella’ for all of a subscriber’s different Member IDs.

Here we will delve deep into why, even without the mandate, you should consider transferring your EPF balance and how it is done.

Even though all your previous member IDs are linked under your UAN and continue to earn interest, here are some strong reasons which you should consider for making a switch:

Service term calculation: When you transfer your EPF balance, your service history is also recorded and then you are eligible for making tax-free withdrawals. The EPFO allows tax-free withdrawals only after five years of continuous service. If you make the withdrawal before this timeline then the proceeds are taxable and may attract Tax Deducted at Source (TDS), depending on the amount and your total income.

Withdrawal process becomes easy: Consolidating EPF in one place makes withdrawals and final settlements easier.

Automatic transfers: You can consider transferring the amount as the EPFO has streamlined and automated the system. Now, if some conditions are met, the EPF balance can be easily transferred with minimal manual intervention.

Aadhaar and bank details should be linked. Also, KYC records should be completely updated. The date of exit from the previous employer is recorded in the system. Also, the auto-transfer requires that both your old and new employer are digitally registered with the EPFO.

Once the new employer credits the first month’s PF contribution, the provident fund body automatically generates a transfer request to move the balance from your earlier employer to the new.

You need to log in to the Unified portal by using your credentials i.e. UAN and password. After that, you need to follow a few steps, to initiate the transfer:

After logging in, click on ‘One member-one EPF account’ under online services. Verify details: Verify your personal information as well as current employment. Then, click on ‘Get details’ to fetch PF account details from your previous job. Request approval from your past/ current employer: Now you need to select either your past employer or the new employer for validating the claim, request an OTP to your registered mobile number, and submit. Authenticate: Authenticate the process via the Aadhaar-linked OTP.

So, while transferring your EPF balance is not mandatory, doing so helps consolidate your retirement savings in one place and makes future claims and withdrawals easier.