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Today, everyone has a PF account. It has been seen many times that after leaving the job, people withdraw the amount from their PF account. But doing so can cause loss. Know the reason.

Almost all the people in India who have jobs have PF accounts. A PF account works as a savings account in a way. 12 percent of the salary is deposited in it. So the same contribution is given by the company i.e. the employer. If needed, you can also withdraw money from the PF account. When people change jobs, the first question that arises in their mind is about the PF account.

Most people think that now the company has changed. So it would be right to withdraw money from the old account. Many people also withdraw PF due to the need of cash in a hurry. By doing this, they get immediate relief, but is it really wise? Or does it cause loss. Let us tell you the complete news about this.

How much loss is there by withdrawing PF?

Interest on PF is added every year and this interest increases your amount manifold by compounding. If you withdraw money as soon as you change jobs, then the benefit of this compounding is lost. Suppose someone deposited money in PF for 10 years and withdrew the amount after changing jobs repeatedly in between.

Then their funding will be reduced considerably by the time of retirement. So along with this, tax has to be paid on withdrawing money before the completion of 5 years. That is, the money which could have secured your future becomes a loss deal if withdrawn in a hurry. Therefore, it is important to take special care of this.

What is the better option?

If you do not withdraw money while changing jobs, then you have a better option that you can transfer the account to the PF account of the new company when you change jobs. This process has now become very easy. Money can be transferred in a few clicks through the online UAN portal. This will keep adding to your PF balance and interest and you will get a large amount at the time of retirement.

If you want to withdraw some money due to immediate need, then there are options for that too, but emptying the entire account is not beneficial in any way. For the long term, it is wise to let the PF continue to run and make it a strong part of your future planning.