EPF Transfer: Upon landing a new job, most people become preoccupied with offer letters, salaries, and new responsibilities. In this rush, many forget to transfer their Employee Provident Fund (EPF) from their previous employer. While this may seem like a mere formality, if EPF remains in the old account, it could have a direct impact on your retirement savings.

Disadvantages of not transferring EPF account

If there are no new contributions to an EPF account for 36 months, it may be considered inactive. Even though the Employees’ Provident Fund Organization (EPFO) continues to add interest over time, tax rules are no longer as favorable. Interest earned on such an inactive balance may be considered taxable income, gradually reducing your savings.

Don’t miss out on the benefits of compounding

The biggest strength of EPF is long-term compounding . When all the money is in a single active account, interest accrues annually on the entire balance. However, if your money is spread across multiple EPF accounts, the compounding effect is weakened. As a result, the corpus at retirement can be significantly smaller.

Loss due to premature withdrawal

When old EPF accounts are lying unused, people often withdraw them when needed. However, if the total service period has not reached five years, such withdrawals become taxable. Transferring EPF ensures continuity of service, and you can benefit from a tax-free withdrawal after completing five years.

Pension records are also affected

EPF transfers are important not only for savings but also for pension purposes. Under the Employees’ Pension Scheme (EPS), a minimum of 10 years of pensionable service is required to receive a pension after retirement . If records for each job are kept separate and not transferred, the service history may remain incomplete, leading to problems with pension calculations.

No delay, transfer EPF now

If you’ve changed jobs and your EPF is still in your old account, it’s wise to transfer it to your new employer’s account as soon as possible. This preserves tax benefits, strengthens compounding, and prevents pension-related problems. Neglecting this can undermine your retirement planning. By transferring at the right time, you can make your money safe, tax-efficient, and secure for the future.