When it comes to financial planning and security, provident fund (PF) is an important component for many salaried employees. This article explains the details of provident fund and what happens to it if the employee resigns from their job.
What is Provident Fund?
Provident fund is a type of savings scheme, where salaried employees contribute a certain percentage of their salary towards the fund. The employer also contributes a certain amount of money to the fund. This money is managed and invested by the Employees’ Provident Fund Organization (EPFO). The fund is used to provide financial security to the employee in case of emergencies or retirement.
The amount contributed by the employee and the employer is taxable, but the interest earned on it is tax-free. The employee can withdraw the money from their provident fund account after they reach the age of retirement or after they resign from their job.
What Happens if I Resign?
If an employee resigns from their job, they are entitled to receive their full provident fund amount. However, the employee must wait for at least two months before they receive the amount. The employer will deduct a certain amount as tax and the remaining amount will be given to the employee.
The employee can also request for an early withdrawal of their provident fund amount. In such cases, the employee will have to pay a certain amount of tax on the withdrawn amount. The amount of tax depends on the duration for which the employee has been contributing to the fund.
Provident fund is an important source of financial security for salaried employees. It is important to understand the terms and conditions of the provident fund before withdrawing the amount. If an employee resigns from their job, they are entitled to receive their full provident fund amount, but they must wait for at least two months before they receive the amount.
For anyone who has worked in a company and contributed to the provident fund, there is a common question “if I resign do I get my full provident fund?” This article will explain the concept of provident fund and the policy surrounding it when a person resigns from a company.
A provident fund is an employee savings scheme designed to give employees a comfortable retirement fund. Employees contribute a percentage of their salary each month, and the employer will match the contribution (up to a certain limit). Most times this is done on a 50/50 basis. Tax benefits are also available for such contributions. In India, a provident fund is managed and monitored by the Employees’ Provident Fund Organisation.
If you resign from a company, you are eligible to receive the full amount that you’ve contributed to the provident fund plus the employer’s contribution. However, withdrawals can only be made after leaving the job for a period of two months. This two month period is known as the vesting period, during which an employee will not be paid any salary. After the vesting period, it generally takes 30-45 days for the withdrawal to be processed. Once the withdrawal is processed, the employee can get their full provident fund back.
Although the money is fully accessible after the vesting period, withdrawing the full provident fund is not always the best financial decision. Investing the funds back into another savings account will enable returns on the money invested. The employee could also explore the Employee Pension Scheme, which allows the money to be invested in certain mutual funds and investment options.
In summary, a provident fund is a great way to save towards retirement. When someone resigns from a company, they are eligible to receive their full provident fund after a period of two months. However, considering longer-term investments could be beneficial for the employee and can help them to plan for a sound retirement.