EPFO: It is common to have ups and downs in career journey. There can be many reasons for losing a job, such as layoff, company closure or the decision to take a break. When the salary coming into the account every month suddenly stops, the biggest concern is about future financial security. Amidst this tension, a big question arises in the minds of the working class that what will happen to their hard-earned money, which has been deposited in the Provident Fund (PF) for years? Will the interest on PF be stopped as soon as the company stops deducting PF?
Does the growth of PF account stop once you leave the job?
According to EPFO rules, whether you are employed or not, there is no immediate negative impact on PF interest. Even if for some reason new PF contributions have stopped coming into your account, interest continues to be paid on the total corpus already deposited.
Technically, the account is considered active for 36 months unless new money comes in. After this period, EPFO puts it in the category of 'inactive' accounts, but the most important thing is that even though the account is inactive, the calculation of interest on it does not stop. This means that even during your career break, your money continues to work for you.
Money grows without doing anything
PF is not just a savings account, but it is a very powerful tool for creating a retirement corpus. The biggest reason for this is compounding interest.
- For the financial year 2025-26, the interest rate on this is fixed at about 8.25 percent, which is quite attractive compared to most of the traditional investment options at present.
- Due to the power of compounding, interest gets added to your principal amount as well as interest.
- A major feature of EPFO is that you continue to get this interest till you complete 58 years of age.
So, even if you currently have a balance of Rs 5 lakh in your account and you do not make any further new contributions, this amount can grow manifold in the long run.
Rushing to withdraw money can prove costly
It is natural to face cash crunch when there is no job. To deal with such situations, EPFO has also made withdrawal rules. You can withdraw 75 percent of the fund when needed, and for the remaining 25 percent you have to wait for a year.
However, financial experts advise that one should avoid using PF for everyday expenses. If you withdraw a large amount midway, you miss out on the tremendous benefits of compounding in the long run. Unless there is a very serious economic crisis, leaving this fund safe for the future is a wise financial decision.
Keep an eye on your lifetime earnings while sitting at home
In today's digital era, it is very easy to get information about your PF balance and the interest added every year. For this there is no need to visit any PF office. You can check your passbook directly by visiting the government's UMANG app or the official website of EPFO.
It is important to keep in mind that after the age of 58 years, interest on the account stops completely. By that time, you should withdraw all your money and invest it in some other better investment option.
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