What happens to your EPS account when you transfer your EPF account?
Many opt to transfer the balance of their Employees’ Provident Fund (EPF) account to their new employer when switching jobs. A large number of employees also have an Employee Pension Scheme (EPS) account along with their EPF account. Do you know what happens to the money that gets accumulated in EPS?
Read on to find out.
How does money accumulate in EPS?
According to EPF rules, 8.33 percent of the employer’s contribution is diverted towards EPS account. Only 3.67 percent of the employer’s contribution is added to the member’s provident fund account, along with member’s own contribution at the rate of 12 percent (of basic salary).
When you opt to transfer your EPF account, the money accumulated, which includes both yours and the previous employer’s contribution, gets transferred to the account PF opened with your new employer.
Does the EPS portion get transferred?
Puneet Gupta, Director, People Advisory Services, EY India says, “According to EPF scheme rules, no pension contribution/balance is transferred when an individual transfers his/her EPF account. This is because the contributions made by the employer in the name of the employee goes into a common pool. While transferring the EPS account, only the service history of the employee gets transferred. The service history gets transferred from the previous employer’s regional provident fund organisation office to new employers’ regional provident fund office. This accumulated service history data is used to calculate the pension benefit.”
As per the EPS rules, an individual is eligible for pension benefit once he/she has completed 10 years in service. The amount of pension he/she is eligible for depends on the period of contribution, service duration and last drawn wages.
Saraswathi Kasturirangan, Partner, Deloitte India says, “Unlike the Provident Fund, which is a defined contribution scheme in which the individual receives the accumulated contributions with interest once certain criteria is met, EPS is a scheme where the benefit is defined based on the pensionable salary and the period of contributions made. An individual is eligible for a pension benefit if he has completed at least 10 years of service. In case the service period is not met, the individual will be entitled for lump sum withdrawal of contribution as specified under the EPS scheme.”
What happens when you opt to transfer the EPF account?
To transfer the EPF account, you will have to submit Form 13. At the time of transferring EPF account, two things gets triggered at PF office – (a) transfer of PF balance to the new EPF account and (b) transfer of service period record for the purpose of pension.
Saraswathi Kasturirangan says, “Once the EPF transfer process is completed, the transferred EPF balance will be reflected in the individual’s EPFO passbook. However, the pension amount transferred will be shown as zero. The transfer forms at the back end capture the length of service, the non-contributory period, if any, and the last drawn wages. This will be used for calculation of pension amount.”
How to check your service period transfer?
An individual can check the whether the service period got transferred or not on EPFO’s member sewa portal.
Gupta says, “An individual can check his past and current service details under the service history tab on the member’s e-Sewa portal.”