Most of us would have switched jobs at some point in our careers and in all probabilities our colleagues would’ve advised us to withdraw our PF corpus when we actually switch because they probably went through the arduous process of transferring their PF Account from one employer to another. Are you someone who had withdrawn your PF just because of this reason, in spite of wanting to get your PF Transferred? Or, Are you someone who actually endured the lengthy and painful process of getting your PF Account transferred?
If so, this news is going to be extremely pleasing for you…
What is this Good News?
The EPF Organization, the governing body of all our EPF Accounts has decided to provide Permanent PF Account Numbers to the over 5 crores members of EPF. It will be called the Universal Account Number or UAN.
Why Did the EPF Organization Decide in Favor of this UAN?
Every year over 12 lakh requests are placed by account holders to transfer their PF corpus from their old account to their new account. This is a very significant load on their staff. On top of this, the current process is time consuming and requires a lot of follow-up from the EPF Account Holder. As a result, even though people are not supposed to close their accounts when they switch jobs, they do it.
So, to motivate people to save up more money for their retirement in their PF Accounts and to reduce the hassle for both the Account Holders as well as Staff working in the EPF Offices, they decided to come up with this UAN.
What Does This Mean?
This means that, once you have your UAN, when you switch jobs, all you have to do is, give your new employer this UAN and he will start crediting your PF money into this account. There will be no hassle of actually filling up forms to initiate a transfer from your old job and follow-up regularly to actually make sure your money reaches the new PF Account…
When will this Start?
The current plan is to start rolling out these UAN’s to EPF Account holders starting October of 2014.
My Opinion About This:
Though October 2014 is still a good 6 months away, considering the magnitude of this rollout I am thinking maybe – add another 3 to 6 months to be realistic. Eitherways, this is an excellent initiative by the EPFO Senior Management and this will go a long way in ensuring that at least this generation of working class will retire with a decent enough savings…
Most of us withdraw our corpus when we switch jobs to avoid this hassle and somehow or other the money gets spent. So, with every switch and withdrawal, our eventual retirement corpus becomes that much smaller.
If we continue to accumulate our PF money throughout our working careers which will span around 20+ years, we can definitely retire with a handsome PF Corpus…
Some Last Words:
Though the purpose of the PF Corpus is to help us save up money for our retirement, given the current rate at which cost of living in India is going up, we should definitely plan to save up a separate retirement corpus that is on top of our PF Corpus.
I had published a book last year titled “Your Complete Guide to Indian Income Tax and Retiring as a Crorepati” which explains how you can save up a Crorepati Retirement Portfolio by just investing under the Section 80C Tax Savings each year.
You can click here to buy the book for just USD 4.99/-
Alternately, if you would like to pay for the book in Rupees, feel free to send an email at firstname.lastname@example.org and I will share more details with you.