Job changes are no longer an exception. It is a very normal thing in modern working life. But when an employee resigns, one question comes up again and again. What happens to the Public Provident Fund or Provident Fund of the old job?
Many people assume that PF interest accumulation stops after salary deposits stop. The reality is, if you follow the rules, this idea is completely wrong.
Over the years, a belief has been formed among employees that if they are inactive for three years, interest accumulation in EPF stops. Due to this misconception, many people withdraw this money quickly. As a result, they lose the benefit of long-term compound interest and tax exemption.
Actually, this belief comes from the old interpretation, not from the law. According to that calculation, interest in PF is calculated on the monthly balance and is credited to the account once a year. That is, even if you change jobs, if the account is active and regular, interest accumulation does not stop.
The three-year rule is basically a result of the old interpretation. The old guidelines said that interest can stop after 3 years of inactivity. But after the 2016 revision, the government clarified—
- The account will be considered inactive at the age of 58.
- Interest will stop after the age of 58
- That is, until the retirement age, whether you are in employment or unemployed, interest continues to be deposited in the PF.
According to experts, even if interest does not stop, the biggest loss in PF comes from negligence. Many people forget to transfer the PF balance after joining a new job.
The idea that no job means no PF interest is stopped is wrong. PF keeps growing depending on your age, membership and UAN. So your PF will silently, slowly and steadily build your future as long as you follow the rules.
So without thinking about it in advance, you can link your PF with a new job. There your account will be active again. There will be no much fluctuation in the interest here. However, if you want to withdraw your money quickly, then you will lose the most there. It will be easier for you to use it if you know the right rules there.