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PF Transfer: Pension Amount Missing - Imran Asks

Milind

Milind Vadjikar  |1238 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 30, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Imran Question by Imran on Sep 29, 2024Hindi
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Dear Sir, I have switched my Job twice. Whenever I switched my Job, I also transferred my PF from my previous Company to my New Company. But when I check my PF balance, I see that the PF amount is transferred, however the Pension amount is zero. Could you please confirm what happens to my PF amount and How can I reclaim it. Thanks And Regards Imran M Khan

Ans: Take eps scheme certificates from your previous employer and submit it to epfo thru your current employer.

Always take eps scheme certificate from the employer whose services you have quit and furnish it to the new employer so that EPS contribution is intact and keeps growing through current employer contribution.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8547 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 29, 2024

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I have worked in India over 15 year and the company that I worked had deducted my PF from my salary and deposited in my PF account. 9 years back I left the job in India and relocated to Dubai. I didn't withdrew my PF and till certain period I was able to see my PF balance. Later I forgot about it and now when I try to login to my account, it doesnt allow me to login as my Aadhaar account was not linked to my PF account. I reached out to my employer and submitted all documents as suggested by my employer to activate my PF account and link my Aadhaar to my PF account . My question is, is it ok to keep my money in PF account until I turn 60/retirement age and withdraw the amount and take benefit of the pension fund. Or should I withdraw the amount now and invest it in FD or MF. I had not withdrawn my PF fund because I was aware that PF allow only 2/3rd of the PF fund to be withdrawn and 1 /3rd remain in the account under pension scheme that we receive as pension after retirement.
Ans: Your situation is quite common among professionals who have relocated abroad. It's great that you are considering your options wisely. Let's explore your options and see what might work best for you.

Understanding Your Provident Fund (PF)
Your Provident Fund (PF) is a long-term savings scheme to provide benefits during retirement. You have a significant amount accumulated from your years of service in India.

Keeping Money in PF Until Retirement
Leaving your money in the PF account until retirement has certain advantages.

Benefits of Keeping Money in PF
Safety and Security: PF is a government-backed scheme, offering high security.

Tax-Free Interest: Interest earned on PF is generally tax-free until withdrawal.

Regular Pension: Upon retirement, you will receive a regular pension from the Employees’ Pension Scheme (EPS).

Potential Drawbacks
Lower Liquidity: Funds are locked in until you reach retirement age, limiting access.

Inflation Impact: The fixed interest rate may not always keep pace with inflation.

Withdrawing PF and Investing Elsewhere
Alternatively, you can withdraw your PF and invest it in other instruments like Fixed Deposits (FD) or Mutual Funds (MF).

Benefits of Withdrawing and Investing
Higher Returns Potential: Mutual funds, especially equity funds, have the potential for higher returns.

Diversification: Investing in different instruments can spread and reduce risk.

Liquidity: Investments in mutual funds and FDs are more liquid, allowing easier access to funds.

Risks to Consider
Market Volatility: Equity mutual funds can be volatile and subject to market risks.

Tax Implications: Withdrawals from PF before 5 years of continuous service are taxable.

Evaluating Fixed Deposits (FD)
Fixed Deposits (FD) are a safe investment option but have their own pros and cons.

Benefits of FDs
Safety: FDs are low-risk and provide guaranteed returns.

Fixed Interest: You know exactly how much interest you will earn over the term.

Drawbacks of FDs
Lower Returns: FDs typically offer lower returns compared to equity mutual funds.

Taxable Interest: Interest earned on FDs is taxable, reducing net returns.

Evaluating Mutual Funds (MF)
Mutual funds can offer better returns, especially if you choose actively managed funds.

Benefits of Mutual Funds
Higher Returns Potential: Over the long term, mutual funds, especially equity funds, can provide substantial returns.

Professional Management: Fund managers handle investments, aiming to maximise returns.

Diversification: Mutual funds spread investments across various assets, reducing risk.

Disadvantages of Index Funds
Average Returns: Index funds mimic market indexes and provide average returns, which may not be optimal.

Lack of Flexibility: They cannot adapt to market changes like actively managed funds can.

Less Protection in Downturns: Index funds cannot avoid poorly performing sectors or stocks.

Choosing Between Direct and Regular Funds
When investing in mutual funds, it’s important to choose between direct funds and regular funds.

Disadvantages of Direct Funds
No Advisory Support: Direct funds lack guidance from a Certified Financial Planner (CFP).

Time-Consuming: Managing and choosing the right funds requires significant time and knowledge.

Higher Risk of Missteps: Without professional advice, the risk of making suboptimal choices increases.

Benefits of Regular Funds
Professional Guidance: Investing through a CFP provides expert advice tailored to your goals.

Regular Monitoring: A CFP regularly reviews your portfolio, making necessary adjustments.

Optimised Portfolio: CFPs ensure your investments align with your risk profile and goals.

Deciding the Best Course of Action
To decide whether to keep your PF or withdraw and invest, consider the following:

Personal Financial Goals
Time Horizon: If you have a long-term horizon, mutual funds might be suitable for higher returns.

Risk Tolerance: Assess your comfort level with market volatility and risks.

Financial Needs
Liquidity Needs: Consider if you need access to funds before retirement.

Tax Considerations: Evaluate the tax implications of withdrawing your PF and the tax benefits of other investments.

Conclusion
Deciding whether to keep your PF until retirement or withdraw and invest in other options depends on your financial goals, risk tolerance, and need for liquidity. Keeping your PF offers security and a regular pension, while withdrawing and investing in FDs or mutual funds could potentially offer higher returns. Consulting with a Certified Financial Planner can provide personalised guidance and help optimise your investment strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Hi everyone..I am Poornima kashyap currently studying in class 12. I am a humanities student with subjects- english, political science, maths, economics and psychology. I have developed anxiety because of my toxic family and i am not able to concentrate at all. I have no space to study. Earlier i wanted to pursue a career in psychology but now as i am studying it i am realising that it is not my cup of tea. I have no hopes about my life and future. I always had and still have a passion for travelling and want to get rid of this toxic family and house. Please somebody enlighten me or it will be difficult for me to even survive without a goal
Ans: Poornima, your struggles with anxiety and a toxic family environment are real and challenging, but you are not alone. Many students feel lost or hopeless in such situations. It’s important to reach out for help—school counselors, teachers, or mental health professionals can offer guidance and coping strategies, even if family support is lacking. Academically, your humanities background with maths and economics opens diverse career paths. Since you have a passion for travel and want independence, consider courses in hospitality and tourism management, travel journalism, international relations, or foreign languages. These fields can lead to careers that involve travel and personal growth. Look for scholarships or entrance exams that allow you to study away from home, giving you both space and new opportunities. Online courses and internships can also help you develop skills and confidence. Remember, your current circumstances do not dictate your future. Set small, achievable goals—such as preparing for college applications or learning new skills—that move you toward independence. Stay connected with supportive people, whether friends, teachers, or online communities. You have the resilience to overcome your current challenges and create a fulfilling, independent life. Take one step at a time, and don’t hesitate to seek help when needed.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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