Switching jobs has become common today, but in the process, many employees forget or delay transferring their Provident Fund (PF) account. While this might seem like a small thing, it can cause significant financial problems later on. From losing interest in your savings to having issues while withdrawing money during retirement, avoiding PF transfer can affect your long-term economic health.
Let’s understand the major problems that can arise if you do not transfer your PF after a job change and what you can do to avoid them.
1. Interest Stops on Inactive PF Accounts After Three Years
If you leave your old PF account idle without transferring it to your new employer, the Employees’ Provident Fund Organisation (EPFO) treats it as inactive after 36 months of no contributions. Once this happens, the account stops earning interest, and your savings do not grow anymore.
Financial advisor Sanjay Chaudhary warns, “Compound interest is the biggest advantage of PF. If you don’t transfer your account after changing jobs, you lose interest, which impacts your retirement savings.”
So, by not transferring the old PF balance, you reduce the final amount you’ll receive at retirement.
2. TDS and Tax Trouble If PF Isn’t Transferred
If your PF account is less than five years old and you withdraw from it without transferring, the withdrawal becomes taxable. You may face a TDS (Tax Deducted at Source) deduction, especially if the withdrawal amount is more than ₹50,000.
On the other hand, if you transfer your old PF to the new account, the total service period gets counted, helping you qualify for tax exemptions. Not transferring breaks this continuity, which may lead to an extra tax burden during withdrawals.
3. Duplicate UANs Can Create Technical Problems
Every employee gets a Universal Account Number (UAN) from EPFO, which helps track multiple PF accounts under one number. But if you do not share your old UAN with the new employer, they may create a new UAN, leading to duplicate accounts.
HR tech expert Meenakshi Rathi says, “Having two UANs leads to issues in updating KYC, claim approval, and pension verification. It’s always better to continue using your existing UAN and link your new PF account to it.”
Duplicate UANs can confuse the system, delay claims, and complicate the EPF and EPS tracking process.
4. Delays or Rejections in Final PF Claims
If you don’t transfer old PF accounts, EPFO will not consider your entire service history when you apply to withdraw your funds after retirement or resignation. Incomplete service records can lead to claim rejection or delayed payments.
For instance, if someone has worked in three companies for over 12 years but hasn’t transferred PF from the first two jobs, EPFO will only reflect the third job’s contribution. This missing history can force you to run around collecting documents, linking old UANs, and submitting Form 13 from previous employers — a process that can take months.
5. Loss of EPS Pension Eligibility Due to Service Break
A part of your employer’s PF contribution goes into the Employees’ Pension Scheme (EPS). To get a monthly pension under EPS, you must complete at least 10 years of total service. But if you don’t transfer your PF from previous jobs, it shows a gap in service.
This gap can disqualify you from getting pension benefits, even if you worked for over 10 years. The EPS balance also does not show up online, so it’s essential to keep records and transfer your EPS share along with your PF.
Step-by-Step Guide: How to Transfer PF Online
The PF transfer process is now fully online and straightforward to complete through the UAN member portal. Here’s how you can do it:
- Log in to the EPFO Member Portal using your UAN and password.
- Go to Online Services > One Member – One EPF Account (Transfer Request).
- Enter the details of your previous employer and current employer.
- Submit Form 13 online.
- Your employer will verify and approve the request digitally.
- Once approved, EPFO usually completes the transfer in 10 to 20 working days.
Note: Make sure your KYC details (like Aadhaar, PAN, and bank account) are updated in your UAN account for a smooth process.
Why You Should Not Delay PF Transfer
Transferring your PF account ensures that:
- You continue earning interest on your full PF balance.
- Your service history remains intact, making you eligible for EPS benefits.
- You avoid the trouble of duplicate UANs.
- Your PF withdrawals remain tax-free if eligible.
- You face no issues in the final claim settlement.
If you’re planning to switch jobs or have already done so, make sure you complete the PF transfer process without delay. It’s a simple step that protects your long-term savings and future pension.
Disclaimer: This article is for informational purposes only. Readers should consult with EPFO or financial experts for personal advice. PF rules may change from time to time.
