The government offers a handsome 8.25% interest rate on your money deposited in the Employees’ Provident Fund Organization (EPFO), which is much better than any other safe investment. Therefore, EPF is extremely helpful in building a strong retirement fund in the long run. But what if a person permanently leaves their job at the age of 40 or 45 and does not withdraw their PF funds? Will the interest on the deposited amount continue even after the EPFO contribution stops? This is a major question on the minds of millions of employees. Let’s find out what the EPFO’s powerful rules say in this regard.
Full benefits are available until the age of 8
This EPFO rule is great news for those planning to retire early or take a career break. According to EPFO rules, if a member leaves their job before the age of 58 but does not withdraw their EPF funds, their account does not become inactive. The account continues to earn interest until the age of 58. This means that even if you leave your job at the age of 40, your deposits will continue to earn interest at an attractive rate of 8.25% for the next 18 years. This facility provides a great opportunity to grow your retirement fund rapidly.
Provision for Interest for 3 Years Even After Retirement
This rule shows how committed the EPFO is to providing financial security to its members. If a person retires at the age of 58 and does not withdraw their PF funds immediately, they will continue to receive interest on that amount for the next three years, until the age of 61. Your account becomes inactive only after you reach the age of 61. However, becoming inoperative does not necessarily mean that you will lose your money; it only means that interest will stop accruing, but the deposits will remain safe.
Why should PF not be withdrawn early
Experts advise avoiding withdrawing your PF balance immediately after leaving your job, as this deprives you of long-term benefits. Many people withdraw their PF balance after leaving their job, assuming the account will be closed. Doing so risks losing the opportunity to earn high long-term interest. If you’re planning to withdraw money and invest it in a fixed deposit (FD), it’s wise to leave it in the EPFO and take advantage of the EPFO’s excellent interest rates, as EPF interest rates are often higher than FDs. Not withdrawing deposits keeps your retirement fund strong.