Combining/Consolidating Multiple EPF Accounts through UAN

Job hoppers often forget to transfer their EPF account to the new organization. However, once the EPF contributions stop after leaving an organization, the balance lying in the account won’t fetch any interest after three years. So, to continue getting the interest and to avail tax and EPS benefits, one should consolidate multiple EPF accounts in one place. 

What is EPF?

The Employees Provident Fund (EPF) is a retirement benefits scheme available to private sector employees, where an employee contributes 12% of his/her basic salary (basic+DA) and the employer also makes a matching contribution. EPF is mandatory for an organization having 20 or more employees and compulsory for employees having a basic salary of up to Rs 15,000 per month. Although it’s not mandatory for an employee drawing a basic salary of over Rs 15,000 to become a EPF member for availing retirement benefits under the scheme, organizations generally extend the benefits to all employees, irrespective of their salary limits. 

Contributions

Both the employer and employee contribute 12% of the basic salary of an employee. However, employees have the option to contribute more than 12% of their basic salary, but interest on contributions over Rs 2.5 lakh per annum will be taxable. On the other hand, matching contributions of 12% of the basic salary from an employer is tax-free and any contributions over the 12% limit will be treated as the part of taxable salary.

While an employee’s 12% contribution entirely goes to EPF, out of the employer’s 12 percent contribution, 8.33% goes to Employees Pension Scheme (EPS) and the remaining 3.67% goes to Employees Deposit Linked Insurance (EDLI).

Benefits

The rate of interest offered by the government on EPF is generally higher than or equal to the other provident funds – like PPF, CPF, GPF, etc. So, prolonged contributions enable an employee to generate a good retirement corpus.

Apart from the lump sum PF amount at the time of retirement, an employee also gets a pension through EPS, provided that the minimum length of EPF membership is 10 years. The age at retirement should be 58 years or more to get a regular pension and 50 years to get an early pension. An employee also gets insurance coverage under EDLI during the EPF contribution period.

Taxation 

The employees’ contribution up to Rs 1.5 lakh to EPF is eligible for tax deductions u/s 80C of the Income Tax Act. Interests on contributions up to Rs 2.5 lakh in a financial year and the retirement benefits on it are also tax-free. Premature withdrawals after 5 years from the start of EPF contribution on joining a service are also tax-free. However, withdrawals before 5 years are taxable. If the PF balance is transferred from one EPF account to another after switching a job, the EPF membership period will be counted from the date of joining the first job. 

What is UAN?

The Universal Account Number (UAN) is a 12-digit number that is allotted by the Employees Provident Fund Organisation (EPFO) to its members, who contribute to EPF for retirement benefits. While the PF account number changes as an employee switch job from one organization to another, the UAN remains the same throughout the employment period of the employee. So, UAN helps an employee to track all his/her EPF contributions, check EPF balance, and transfer and/or withdraw online for his/her PF account.

By moving the processes online, UAN helps employees from the hardship of cumbersome paperwork and visits to previous employers to withdraw or transfer the EPF amount.

Benefits of Combining/Consolidating Multiple EPF Accounts

The following are the benefits of combining/consolidating multiple EPF accounts:

• Interest on the entire amount.
• Saving tax by avoiding withdrawals from short-term EPF accounts.
• Getting a pension under EPS by extending the combined contribution period to 10 years or more.

How to Combining/Consolidating Multiple EPF Accounts through UAN

As all an employee’s previous and current EPF accounts are now linked with the unique UAN, combining or consolidating multiple EPF accounts has become easy. 

How to do it?

Before initiating the PF transfer process, you need to activate your UAN and update your mobile number, Aadhaar number, bank account details, and date of exit from the previous employment, which may be done by visiting at unified portal-mem.epfindia.gov.in/memberinterface/ portal.

You have to transfer your PF from the old establishment to the new establishment in one go, as only one transfer request against a previous member ID is accepted.

• For online PF transfer, you have to log in to the EPF portal by using your credentials i.e., UAN and password.
• Visit the homepage of the EPFO website and click on the Online Transfer Claim Portal (OTCP) under the category “FOR EMPLOYEES”.
• After logging in, you must verify your personal information and PF account for present employment by clicking on ‘One Member Online Services’.
• On entering the PF account no. of the present PF Account and clicking the “Click here to get details” the name of the establishment, address of the establishment, PF Account held by  EPFO office, and Member’s Name would get populated. Other details i.e. Father’s/ Spouse’s name and Relationship and Date of Joining the fund under present PF Account number would appear, if available. The member needs to mandatory fill up other details, if not available.
• The member will have the option to get the claim attested through the previous employer or present employer.
• The application form is completely filled up and the member can go through the completed application by clicking on the “Preview” button.
• After verification, based on the availability of an authorized signatory holding DSC, choose either your previous employer or current employer for getting the claim form attested. After that, choose either of the employers and provide your member ID/UAN and then you have to click on ‘Get OTP’ to receive an OTP in your UAN-registered mobile.
•  The transaction will be complete, once you enter and submit the OTP. 

Final Thoughts

As the interest payments stop after three years after the contributions stop in an EPF account, it’s better either to withdraw or transfer the EPF amount lying with the previous employer(s). However, in case of withdrawal, the amount withdrawn will become taxable if the money is withdrawn before the completion of 5 years. So, it’s better to transfer the PF balance lying in the EPF account of the previous employer to the EPF account of the current employer not only to save tax but also to get a pension under EPS. 

Frequently Asked Questions (FAQs)