Did you know that leaving your job early would result in your pension money being lost? The Employees’ Provident Fund Organization (EPFO) has made a major and historic change to the rules of the Employees’ Pension Scheme (EPS). Now, even if an employee leaves their job before six months, their pension contribution will not be lost. Under the new system, employees who have been with the EPFO for at least one month can also withdraw their EPS contributions upon leaving.
Previously, less than six months of service in the EPS was considered “zero completed years.” This meant that employees who resigned after even five months lost their pension contributions. They could only withdraw their PF and the PF deposited by the company into their account.
What is the new EPFO rule
According to the EPFO’s April-May 2024 circular, members who complete one month of service can also withdraw their EPS contributions. This simply means that employees who leave their jobs early will now receive their pension funds back. Their money will no longer be wasted. This rule is a major relief for those in precarious employment or working on contracts.
Who will benefit the most
This change is particularly beneficial for sectors where employees frequently change jobs or work for short periods.
For example, young people and trainees working in retail, BPO, logistics, and contract-based jobs who leave their jobs on short notice will now receive pension fund benefits.
Example:
Suppose Mohak worked in a private company. He opened a PF account, and ₹3,600 was deducted from his salary. The employer deposited ₹2,350 into PF and ₹1,250 into EPS. Raunak worked for 5 months and then resigned.
Under the old rules, his pension contribution of ₹6,250 would have been lost. But now, under the new rules, he will get this amount back as well. However, if someone resigns within 15 days, the EPS money will still lapse.
What to do if the EPS money is not reflected?
If you resigned before six months and the EPS money is not reflected in your PF passbook, you can file a complaint with the EPFO. You can use Form 10C to claim the EPS amount. It would be wise to preserve a screenshot or PDF of your passbook as proof. This new rule ensures financial security for millions of employees.