What Happens To EPS When You Transfer Your Old EPF To New Employer: EPF or Employee’s Provident Fund and EPS or Employee’s Pension Scheme are two terms coined under the Employee’s Provident Fund & Miscellaneous Provisions Act, 1952. The Employee’s Pension Scheme provides a saving opportunity for individuals to be used after their retirement. Under the Provident Fund Scheme, both the employer and the employee of a particular organisation contribute towards the fund. The entire amount of the contribution is accumulated and earns interest until the retirement of the individual.
Under the Employee’s Provident Fund, The employee’s contribution is 12% of his/her salary. The EPF account offers an attractive rate of interest which is 8.5% per annum. It is a saving instrument that applies to every individual working in an organisation registered under the Employee’s Provident Fund Organisation or EPFO. EPF is mandatory for all organisations where the workforce exceeds 20 employees.
When an employee changes organisation, he/she must transfer his/her EPF account from the old organisation to the new organisation to comply with the rules of the Employee’s Provident Fund. When the EPF is transferred from one organisation to another, it is mentioned in the Universal Account Number or UAN passbook issued by the EPFO. But, the passbook does not show any information relating to the transfer of EPS.
So, What happens to an EPS account during the transfer of EPF? Let us discuss this in detail in this article.
When One Can Transfer Old EPF Account To New Employer
The EPF is for employees who are contributing to the scheme under the Employee’s Provident Fund Organisation. Each employee registered under EPF is provided with a unique account number called Universal Account Number or UAN. The UAN remains the same throughout the employment life of an employee, and even if he changes organisation, still the UAN remains intact. The UAN can help access the details of the employee.
When an employee changes his/her working organisation, he/she can transfer the EPF account to the new employer by updating the UAN with the new employer. The transfer allows the employee to keep contributing to the fund without any hassle.
The EPF account can be transferred with the help of EPFO’s online facilities. The online facilities of the EPFO can only be accessed after completion of the KYC procedure with the EPFO. The claim to transfer the PF account should be attested by the employee’s current or previous employer. As soon as the EPF account is transferred, the old EPF balance will also be transferred to the new EPF account. One can also check their balance with the help of EPF Account Balance via Mobile Phone, SMS and so on.
What is EPS?
EPS is the abbreviated form of Employee’s Pension Scheme, and it is initiated by the government to ensure that every employee is provided with a pension after his/her retirement. The EPF and EPS go hand in hand, and each employee who contributes to the EPF is eligible for EPS. The employer provides 8.33% of the salary of an employee towards the EPS.
Here are some of the Key feature of EPS:
- EPS offers an opportunity to avail lifelong pension to each and every employee contributing to the EPF.
- As per the EPS scheme, the employer has to contribute 8.33% of the actual salary or ₹6,500 or ₹15,000, whichever is the minimum. If an employee’s contribution is less in terms of amount or number of years, then his/her pension amount will be less.
- EPS contribution does not receive any interest as the EPF fund does.
- An employee can only avail of the pension amount after completing 10 years of service or after attaining 58 years of age.
- An early withdrawal of pension amount is available to employee after attaining 50 years of age, but it is subjected to a 4% discount factor.
What Happens To EPS During PF Transfer
We all know that when an employee changes his/her organisation, he/she has to validate the UAN with the new employer, which would allow him/her to transfer the EPF account from the old organisation to the new. Now, the big question is, what happens to EPS during the transfer of EPF?
So, when an individual changes his/her job, he transfers the amount of PF from the old to the new organisation, but the pension amount that is not transferred remains intact with the old member ID. But, the number of years an individual has worked can be tracked easily with the help of service details, which will again help him/her withdraw the pension amount. Here, the EPF is consolidated into one account but, the EPS amount is reflected in the passbook of the UAN.
Annexure K And Its Relation With EPS
When a person searches the UAN helpdesk for EPS transfer, he/she finds information displaying, “While Transferring PF from One Establishment to Another, the service detail information is furnished to the receiving PF office in the Annexure K which will be used to calculate the pension amount.” So what is Annexure K?
Annexure K is a document that contains all the details of an EPF account of an employee. It is furnished within the regional EPF offices, with the employee’s transfer from one organisation to another.
Any employee can obtain Annexure K by following the procedure mentioned below:
- Go to http://epfigms.gov.in/
- Click on Register Grievance to register a complaint of EPF. You can easily obtain Annexure K.
When Can A Person Withdraw The Pension Amount From EPS?
An employee registered under the EPFO is eligible to receive the pension amount only after completing 10 years of service. However, the employee must be 50 years or 58 years of age to withdraw the pension amount. If an employee wants to withdraw the pension at an early stage, he/she can do so after attaining 50 years of age but before attaining 58 years of age. The early withdrawal of pension amount is subjected to a 4% discount rate.
In case an employee changes his/her organisation, and the present organisation is not registered under EPFO, then he/she can apply for a scheme certificate under the EPFO, which will be helpful to them in the future.
An EPS scheme certificate is a document issued to every employee registered under the EPFO, which contains their service details. It also contains the family details of an employee, which facilitates easy identification of the nominee to the pension amount after the employee’s death.