The EPFO looks into the practices related to EPS and EPF. According to one of the principles of the EPFO, the employee needs to provide 10 years of service to be eligible for the EPS scheme. This term of 10 years is needed to be completed before the age of 58 years. But sometimes the employee resigns before the mentioned term. Then, there is always a query that remains unanswered. What will happen to the provident fund and pension scheme as we quite early? That is, you contributed to the scheme for less 10 years. Can you avail the funds that you contributed? So let’s have that query answered in this article.
Effect On Provident Fund :
The EPF remains unaffected by the term stated. That is, your withdrawal is not affected by the norm of completion of ten years of continuous service. But if you withdraw your funds early, then the interest earned on the amount collected in the EPF is much less. That is, you will have less amount on the maturity of the scheme. But you can withdraw the EPF amount in full after 58 years of age only. If you are unemployed or do not make contributions for more than 2 months, you can tap into your EPF funds. You can withdraw 75% of the balance in this case.
Moreover, the early withdrawal of the EPF account makes the sum taxable. It happens if you withdraw from for EPF scheme before 5 years of contribution. For this, the claims can be made online on the EPFO portal using the AadhaarCard.
Effect On Pension Scheme:
The norm of 10 years of service has a great impact on the pension scheme. If you resign before providing the 10 years of service, you are not eligible for a pension after 58 years. The amount that you contribute is collected in the EPS account. If you resigned before 10 years of service, then you will not receive an EPS certificate. This certificate certifies your eligibility for a pension. The balance in the account can be withdrawn in the form of a lump-sum amount. But this lump sum money is taxable. This can be done using the Form 10C. That is lump sum withdrawal before the completion of 10 years of service. To download the form 10C, you can visit the link:
But it is important to note that if you complete 10 years of service before 58 years of service. Then, you can not withdraw the amount in a lump-sum manner. Then you will only be eligible for a pension at the end of 58 years of age.
The EPF and EPS are long term financial security schemes. It provides the pathway for the aged employees to look after them. This makes them independent even at the latter stages of life. You might resign from the organization due to certain circumstances where you contributed to the EPF account. But it is advisable to carry the scheme forward for as long as possible. You can have the balance of EPS withdrawn in the lump sum amount if you have not served and contributed to EPF for 10 years, at least. Also, you can have partial withdrawal from the EPF account in times of need too.