Kolkata: For most employees in this country, the retirement age is considered 58 years and it specially applies for EPF (Employee Provident Fund) subscribers.
However, some employees retire before the age of 55, especially if they have completed at least 10 years of service. Some people work until the age of 58. However, on some occasions an employee could forget to withdraw his/her money in the EPF account or transfer them to a new account after retirement. This can lead to their EPF account becoming inoperative. This can directly impact the interest earned on the account. EPFO (Employees’ Provident Fund Organisation) has explained through a post on the social media platform X why employees should avoid their EPF accounts from becoming inactive and how this could lead to loss of interest.
When can an EPF account turn inactive?
When an EPF account remains dormant for a long period, it can become inactive under established rules. This is somewhat similar to a savings bank account. Once an EPF account turns inactive, it ceases to accrue interest. However, according to EPFO rules, interest can be paid on such accounts until the member reaches the age of 58, provided the relevant criteria are met. Therefore, it is not advisable to abandon your EPF account after retirement. If you retired before the age of 55, pay attention until the age of 58.
In its social media post, the EPFO stated that if a person retires before the age of 55, they should withdraw their EPF funds by the age of 58 to avoid losing interest. If you have taken early retirement and have not yet withdrawn your EPF funds, it is important to monitor your account.
In such a situation, you should consider withdrawing your EPF funds as per the rules, or transferring them to a new account if you are working for a different company with PF coverage. Leaving your account unused for several years can be detrimental.
If an employee retires at age 55 or later, the EPFO recommends withdrawing their EPF funds within three years, or 36 months, from the date of retirement. This reduces the risk of interest loss.
For how long will interest accrue after retirement?
According to the EPFO, if an employee retires at the age of 55 or older, their EPF account may become inactive 36 months from the date of retirement. After this, the account ceases to accrue interest. For example, if a person retires at the age of 58, their EPF account can continue to earn interest until the age of 58.
However, if an employee voluntarily retires before the age of 55, such as at age 50, their EPF account can continue to accrue interest until age 58. In this situation, the account is considered inactive only after the member reaches 58. On the other hand, if an employee retires at age 60, according to the rules, they can receive interest until age 63.
Will inactive EPF accounts continue to earn interest @8.25%?
The EPF interest rate for FY26 is 8.25%. However, this does not mean that an old or inactive EPF account will continue to earn interest at 8.25%. The interest payment period depends on the applicable EPFO rules.
Does an inactive EPF account earn interest?
According to the EPFO, inactive accounts do not earn any further interest. However, under current rules, interest is paid on accounts until the member reaches the age of 58. Therefore, it is not advisable to leave an EPF account idle for a long time.
What to do if EPF account becomes inactive?
If you are still employed in a company that offers PF benefits under the EPF & MP Act, 1952, you should transfer the funds from your old EPF account to your new account. This can be done either online or offline. If you have retired, you can withdraw the funds from your EPF account as per the rules.
