How to Merge Two PF Accounts: Employees working in the private sector often switch jobs for better salaries, career growth, and a better work culture. Switching jobs is beneficial for professional growth, but during this process, an important financial responsibility is often overlooked: updating your Provident Fund (PF) account. If the PF account is not transferred correctly when changing jobs, several problems can arise in the future.
Common Mistakes Related to PF Accounts
When an employee joins a new company, their PF member ID changes. However, the Universal Account Number (UAN) should remain the same. Due to a lack of information or sometimes an HR error, a new UAN is generated. In this situation, the employee’s PF money gets split across different accounts. Initially, this problem seems minor, but over time it can become a major hassle.
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Why Merging PF Accounts is Important
If an employee’s PF funds are spread across multiple accounts, it not only becomes difficult to track the balance but also causes problems during transfers and withdrawals. In addition, there can be losses in interest and tax-related issues. Therefore, merging PF accounts under a single UAN is considered extremely important.
What to Do If You Have Two UANs by Mistake
If an employee has two UANs, there’s no need to panic. According to EPFO rules, the latest UAN associated with the current job should be kept active. The PF account linked to the old UAN can be transferred to the new UAN. For this, you need to fill out Form 13 online on the EPFO’s Unified Member Portal, after which the transfer process begins.
KYC Update is Essential
For merging or transferring PF accounts, KYC update and verification are mandatory. The active UAN must have updated and verified information related to Aadhaar, PAN, and bank account. If the KYC is not complete, it is necessary to update it first. After KYC verification, the old PF balance is transferred to the new account as soon as Form 13 is submitted.
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Benefits of merging PF accounts
Merging PF accounts consolidates the employee’s entire fund into a single account, preventing any loss of interest. It reduces tax-related complications and combines the entire service period. The biggest advantage is realized at retirement, when the employee receives a large lump sum. If the accounts remain separate for a long time, some PF accounts may become inoperative, leading to losses in both interest and tax benefits.
Disadvantages of not merging PF accounts
If PF accounts are not merged, multiple claims may be required at the time of withdrawal. The entire amount cannot be received at once, and the likelihood of taxes being levied on the interest increases. In many cases, withdrawing money from old accounts becomes quite difficult, causing unnecessary trouble for the employee.
