As Mr. Sharma rightly said, it is better to transfer your PF balances of old companies in to your new PF account as it is very beneficial to you in future.
Refer the following Benefits:
Provident Fund Secrets (1 of 6)
YOUR PF ENTITLES YOU TO PENSION TOO
• Despite the popularity of the EPF as a saving tool, not many people are enthused by or even aware of the Employees’ Pension Scheme. Introduced in 1995, it is funded by diverting 8.3%, or a little more than a third of your PF contribution. The pension on retirement is linked to the number of years in service and the average salary drawn in the year before retirement.
• However, the scheme has failed to draw the EPFO’s 5 crore members because of the measly payouts associated with it. The reason is that since most employers pay PF only on the mandatory salary cap of Rs 6,500 per month, the pension income for a majority of workers is abysmally low, at times, less than Rs 1,000 a month.
• It is, however, possible to get a higher pension income. “Good employers like Infosys pay Provident Fund contributions on the entire basic salaries,” says SC Chatterjee, the Central PF Commissioner. “If your basic pay is Rs 30,000 a month, employers can invest 24% of this amount into your PF account. “You will be entitled to a pension on the basis of your actual basic pay rather than Rs 6,500,” he adds.
FOR SALARIES UP TO RS 6,500:
For salaries up to Rs 6,500, the government also chips in with a subsidy of Rs 75. This added up to Rs 994 crore for all EPF members in 2009-10. Another way smart employers help boost the pension is by raising the worker's salary in the last year of employment.
"Suppose you earn Rs 25,000 and contribute 8.33% towards EPS. However, on your 57th birthday, your employer can raise your salary to Rs 1 lakh. Since your salary for the last one year will be Rs 1 lakh, you can get a pension of around Rs 50,000. So you can get twice your original salary as pension," says experts.
However, for this to happen, the employer should have contributed his share to the Provident Fund on the actual basic salary, not the mandated limit of Rs 6,500 for the entire service period. Though this is not fair to other workers who are part of the pension pool, the pension scheme's design makes this manipulation possible.
EPS MONEY AS A LUMP SUM ALONG WITH YOUR PF BALANCE
If you don't want a pension from EPF, you can get the EPS money as a lump sum along with your PF balance. The benefit will not be linked to the actual contributions made, but to your last year's average salary and the number of years in service.
What if: You retire early, die in harness, change jobs...
If you retire before the age of 58
Even if you stop working before reaching the age of superannuation, you can avail of pension benefits. However, you shouldn't be less than 50 years of age. Also, the pension amount will be reduced by 2% for every year. So, if after working for 25 years, you take retirement at 50, your pension amount should be Rs 2,321 per month. But as you left service eight years before the age of superannuation, your pension will be reduced by 16%-it will be Rs 1,950.
IF YOU HAVE WORKED FOR LESS THAN 10 YEARS
If you have completed less than 10 years of service, you can avail of the pension as a lump sum by opting for the withdrawal benefit. This amount will be provided to you on the basis of your annual contribution to the pension fund multiplied by the number of years that you have completed in service. You will also be entitled to a small interest on this amount, again depending on the number of years that you have been in service.
If you die before retiring
If you die while you are employed with an organisation, your pension benefit is not lost. Your legal heirs will be entitled to a pension, which is a maximum of Rs 1,000 per month (Rs 750 for spouse and Rs 250 for two children till they turn 25).
However, you should have put in a minimum of one month's service to avail of this benefit. Also, the widow will not be entitled to a pension if she marries again, while dependent parents will be if the employee has no eligible family or has made no nomination.
IF YOU CHANGE JOBS
When you change jobs, and shift you PF account, your pension doesn't automatically get transferred. You need to apply for a scheme certificate through Form 10C and route it through the new employer. The certificate has details of the previous employer and years of pension contribution.
"The PF account is linked to an individual, but the EPS scheme is pool-based and can't be started all over again. So when you change jobs, your earlier service is not considered and it reduces the pension amount,"
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USE EPF TO FUND THE FOLLOWING
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Have you finally zeroed in on your dream house but are running short of funds? Or perhaps your child's education cost is more than you had planned for? At such times, it's easy to fall back on your EPF savings. While you cannot withdraw the entire corpus to fund such needs, you can do so partially for specific occasions, such as children's education, marriages, or for buying a house or a plot of land.
Go through the following list to find out when you can avail of this facility, the amount you can withdraw and the conditions you need to fulfill.
Marriage or education of self, children or siblings
--> You should have completed a minimum of seven years of service.
--> The maximum amount you can draw is 50% of your contribution (12% of the basic salary).
--> You can avail of it three times in your working life.
--> You will have to submit the wedding invite or a certified copy of the fee payable to the educational institution.
MEDICAL TREATMENT FOR SELF OR FAMILY (SPOUSE, CHILDREN, DEPENDENT PARENTS)
--> You can avail of it for major surgical operations in a hospital or by those suffering from TB, leprosy, paralysis, cancer, mental derangement or heart ailments.
--> The maximum amount you can draw is six times your salary or the entire contribution made by you till date, whichever is less.
--> You must show proof of hospitalisation for one month or more with leave certificate for that period from your employer. You must also prove that you are not a member of the Employees' State Insurance Corporation or are unable to use its facilities for surgery/treatment.
REPAY A HOUSING LOAN FOR A HOUSE IN THE NAME OF SELF, SPOUSE OR OWNED JOINTLY
--> You should have completed at least 10 years of service.
--> You are eligible to withdraw an amount that is up to 36 times your wages.
Alterations/repairs to an existing home for house in the name of self, spouse or jointly
--> You need a minimum service of five years (10 years for repairs) after the house was built/bought.
--> You can draw up to 12 times the wages, only once.
DAMAGE DUE TO NATURAL CALAMITY
--> You can withdraw up to Rs 5,000 or 50% of your contribution to the provident fund.
--> You have to apply within four months of the calamity.
--> As proof, you need a certificate of damage from the requisite authority and a calamity declaration by the state government.
CONSTRUCTION OR PURCHASE OF HOUSE OR FLAT/SITE OR PLOT FOR SELF OR SPOUSE OR JOINT OWNERSHIP
--> You should have completed at least five years of service.
--> The maximum amount you can avail of is 36 times your wages. To buy a site or plot, the amount is 24 times your salary.
--> Can be avail of it just once during the entire service.
EQUIPMENT PURCHASED BY PHYSICALLY HANDICAPPED EMPLOYEES
--> You can draw up to six months' basic salary and dearness allowance, or your share of PF contribution with interest, or the cost of equipment.
--> You will have to submit a medical certificate.
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