Top News

Nowadays, many people take a career break of one or two years between jobs. Some leave employment for higher education or family responsibilities, while others stop working for a while due to health issues or job loss. In such situations, the biggest question is: what happens to the money in the EPF account after leaving a job? Will it continue to earn interest? Should the entire amount be withdrawn? Let’s understand this in simple terms.

If you have left your job, your EPF account does not close; the entire accumulated amount remains yours. Even if you do not find a new job immediately and no new contributions are made to the account, the EPFO ​​continues to pay interest on the existing balance in accordance with established rules.

How long does the EPF account earn interest?
According to EPFO ​​rules, even after leaving a job, the amount in your EPF account continues to earn interest until you reach the age of 58. However, if an individual leaves their job at the age of 55 or later, they will earn interest for a maximum of three years only. After this period, the account is considered 'inoperative,' and no further interest is accrued. Currently, the annual interest rate on EPF for the financial year 2025-26 has been set at 8.25%.

Is it advisable to withdraw EPF funds during a career break?
Under the new EPF rules, employees can withdraw up to 75% of their EPF balance immediately after leaving a job. The remaining 25% can only be withdrawn if the employee remains unemployed for 12 consecutive months. Unlike in the past, the withdrawal amount now includes the employee's contribution, the employer's contribution, and the interest earned on both.

Withdrawing money early can lead to losses
Withdrawing EPF funds during a career break can impact your future retirement corpus. Additionally, tax implications must be considered; if you have not completed five years of continuous service, you may be liable to pay tax on the EPF withdrawal. However, if you have completed at least five years of continuous service and withdraw the funds due to retirement, resignation, disability, company closure, or other valid reasons, the entire EPF balance remains tax-free.

What should you do if there is a delay in interest credit or claim settlement?
It can sometimes take a while for the interest credited by the EPFO ​​to reflect in the passbook. However, if your account is active in accordance with the rules, the interest is certainly credited. Online claims are usually settled within 7 to 10 days, provided the KYC process is complete. If a claim is not settled within 20 days, the member can lodge a complaint on the EPFiGMS portal. Under the new rules, if a claim is not settled within the stipulated timeframe without a valid reason, the concerned official may be liable for a penal interest of 12% per annum.

Disclaimer: This content has been sourced and edited from TV9. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.