Many employees withdraw their PF after switching jobs, but EPFO warns it can damage your future security. Learn why keeping your PF account active ensures pension, tax savings, and a stronger retirement fund.
The Hidden Cost of Withdrawing PF Too Soon
Changing jobs often feels like a fresh start. But along with the excitement comes financial stress—waiting for your first paycheck, adjusting to new expenses, and balancing old commitments. In that moment, dipping into your Provident Fund (PF) balance looks like the easiest solution
The Hidden Cost of Withdrawing PF Too Soon
Changing jobs often feels like a fresh start. But along with the excitement comes financial stress—waiting for your first paycheck, adjusting to new expenses, and balancing old commitments. In that moment, dipping into your Provident Fund (PF) balance looks like the easiest solution.
But here’s the truth: withdrawing your PF after every job change is one of the costliest mistakes you can make. What feels like quick relief today could weaken your retirement safety net tomorrow.
EPFO and PF: Why They Matter So Much
Every salaried worker in India contributes to the Employees’ Provident Fund (EPF), managed by the EPFO (Employees’ Provident Fund Organisation). It’s not just savings—it’s a guarantee for your old age and your family’s security.
Here’s how it works:
- 12% of your basic salary goes into your PF account each month.
- Your employer adds another 12%, out of which 8.33% goes directly into EPS (Employee Pension Scheme).
- The remaining part stays in PF and earns 8.25% annual interest (FY 2024–25).
The Smarter Move: Transfer Your PF Account
Instead of withdrawing, transfer your PF to your new employer. Thanks to the UAN (Universal Account Number) portal, the process is quick and fully online.
When you transfer:
- Your balance plus interest stays safe.
- Pension eligibility remains intact.
- You avoid unnecessary tax deductions.
- Your retirement fund grows into a much larger amount.
