According to EPF norms, a person having less than ₹15000 salary is liable to enroll in the EPF scheme. What if over the years, you cross that mark. Then also, would it be compulsory for you to contribute? Or can you terminate the membership once you reach that mark? In this article, you will have detailed information on this query. What if an employee, while joining organisation, has a basic salary of Rs 11200 and after some period of time, his/her basic salary increases above Rs. 15001/-, does he/she have an option to cancel his/her membership from the Provident fund act?
Individuals working for an organisation are rewarded with increments in their salaries over the years of service. This increase is mandatory for an employee working for the same organization. This increment is made every year for the employee. A 10% increase in the payment has been made vital by the government. Moreover, if the employee’s work is beyond expectations, he/she might get a higher percentage increase.
Do You Have The Option To Terminate PF Investments Once Your Salary Increases To ₹15000
Since we know that any employee earning below ₹15000 has to compulsorily opt for the EPF scheme. But a question might come to your mind. What if your salary increases from let’s say ₹11200 to ₹15001? Can we terminate the EPF scheme then?
To get it straight, No, you can’t terminate your membership. If your salary was below ₹ 15000, you would have already been enrolled in the EPF scheme at the time of joining. While working over the years, your salary will cross that mark. But you can’t terminate or cancel your enrolment from the EPF scheme once invested. You will have to continue to contribute to your EPF account compulsorily.
But, If you really want to terminate your enrolment. Then, you can switch to a new company. For instance, your salary reaches above ₹15000 in the previous organisation. And you get a job in another company having a marked salary above ₹15000. Only then you can opt-out from EPF service while beginning a new session in the new company. But it would be difficult to convince the employer to do the same.
Reason Compelling To Terminate EPF Services
It might be tempting for you to have a higher in-hand salary. As the EPF contributions are a part of your basic pay, you might be looking to terminate it. Your contribution stands to be 12% or 10% of your basic pay. Moreover, you might need extra money to fulfill your family requirements. But always try to avoid terminating the EPF scheme.
This is because as your employer also contributes to your EPF account. This means you would get additional income above your pay. Moreover, everyone tries to invest in securing their future. And PF investments stand to be the best as they provide 8.50% interest on your PF balance every year. This would increase your returns in many folds over the years. So, always consider the EPF scheme for your secured future.
Withdrawal is not generally allowed in such circumstances. Unless you have given up working or decided to be a self-employer. According to norms, if you have no job at the time of withdrawal. And 2 months of waiting time has passed then; you can apply for the withdrawal. You will have to state the same reason. For this, you will have to fill form-19, sign it, and get it attested by your previous employer. You will also have to provide a cancelled cheque of the bank account in which you want your funds transferred.
Also, there is another method to withdraw a portion of money from your PF account. These partial withdrawals are only allowed when you have to fulfill a big financial responsibility. The responsibilities can be:
- Marriage or education of children. Or you yourself perusing for higher studies.
- Addressing health emergencies of a member of your family or for yourself.
- Replaying your house loans or to buy one. But this can only be done if you have contributed for at least 10 years of service.
- You can also withdraw 50% of the account balance. But for this, you should have been contributing to the PF account for at least 7 years.
But a word of advice never use the partial withdrawal of the EPF money, unless you are in a dire situation to use it. As EPF provides you a risk-free, secure, and protected investment for your retirement.
What Is PF?
EPF is a retirement benefits scheme for salaried employees. The employee can belong to any sector(Government, public, or private) to avail the PF scheme. EPFO manages these funds. EPFO is the committee handling all the issues related to EPF. This is a saving platform where a part of your basic salary is saved for your retirement life.
Any organisation having more than 20 employees has to opt for PF services. The companies having less than 20 employees can also enroll willingly into the EPF schemes.
We might face harsh financial situations. Thereby we might be looking to get more in hand cash in order to fulfill our needs. Therefore, we might consider to terminate our EPF scheme to have more in-hand salary. But by this, you will be hampering your retirement reliefs. Moreover, in dire circumstances that partial withdrawal norms could serve our purpose. So, we should always try our best not to give up our EPF scheme.