WHEN a salaried employee switches jobs, her provident fund (PF) balance will now get automatically transferred to the new employer without any documentation. The account will get seamlessly transferred the moment the new employer deposits the PF contribution from the employee’s first month’s salary.

This seamless transfer of PF balance has started from April 1. The employee will have to share details such as UAN, Aadhaar number, mobile number and the date of exit to the new employer to enable auto-transfer. The PF balance will trigger an auto-transfer process against the employee’s previous PF ID to the new PF ID if the Universal Account Number (UAN) is seeded with Aadhaar and verified at the previous establishment level.

The date of exit of the previous job is mandatory for the transfer. The date of exit can be any date in the month in which the last contribution was made by the previous employer.

Seeding of UAN & Aadhaar

An SMS trigger will be sent to the registered mobile number of the employee and a transfer will be initiated. If the employee does not stop the proposed auto-transfer within 10 days, the first contribution of the employer will be deposited to the employee PF account and reconciled. The Employees’ Provident Fund Organisation (EPFO) will send an SMS and email to the employee after the auto-transfer also. The transfer includes both the EPF as well as EPS amount. The transfer will be shown as a credit entry in her latest passbook.

The automatic balance transfer simplifies the process of managing the PF account across different jobs. Sandeep Agrawal, director and co-founder of Teamlease Regtech, says the EPFO introduced the automatic transfer of EPF accounts to enhance its digital initiatives and streamline services for subscribers. “This move offers a hassle-free experience for employees changing jobs.”

The automatic transfer of EPF balance will not be applicable for those employees who are under the exempted PF trusts. Also, automatic PF balance transfer will not take place if the UAN is not seeded with Aadhaar and the date of exit is not updated by the previous employer.

Why balance transfer is important

An employee must transfer the PF balance with each job change to earn interest every year and let the retirement corpus grow. For FY23, the EPFO has fixed the interest rate at 8.25%, a three-year high.

In March last year, the retirement fund body raised the interest rate slightly to 8.15% for 2022-23, compared to 8.10% in 2021-22. In March 2022, it had reduced the interest rate on EPF for 2021-22 to 8.1%, marking the lowest since 1977-78 when the EPF interest rate was 8%. In fact, the current interest rate offered by the EPFO is highest amongst all debt-oriented investments such as the Public Provident Fund, which is offering 7.1% per annum. Transferring a PF account instead of withdrawing gives the member the benefit of compounding of funds.

If the total service is more than five years, then tax at source (TDS) is not deducted on withdrawal.