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Planning to Transfer EPF Balance to NPS Tier-1 Account? Here is What You Should Do

Image for representation.

Image for representation.

Under some provisions, the Pension Fund Regulatory and Development Authority (PFRDA) allows EPF subscribers to transfer their funds to an NPS account.

Everyone wants to invest in such companies, bonds, shares or assets which give them good returns. In view of decent returns, people seem to be changing the way they invest. One such example of this is that many people prefer the National Pension System (NPS) investment to the Employees Provident Fund (EPF). In 2015, the Union government gave people the option to transfer the balance of the EPF to NPS tier-1 account.

Under some provisions, the Pension Fund Regulatory and Development Authority (PFRDA) allows EPF subscribers to transfer their funds to an NPS account.

Those who have worked for five years or more on a continuous basis don’t have to pat any tax while transferring the EPF balance to NPS.

Tax will be deducted only if an EPFO subscriber withdraws more than Rs 50,000 from EPF account before completing five years of continuous service.

How to transfer EPF balance to NPS Tier-1 account

Step 1: Go to NPS portal to open an NPS Tier-1 account via Points-of-Presence (PoP), banks or other institutions identified with PFRDA

Step 2: Get an application submitted through the existing employer to initiate the fund transfer. The request has to be submitted to the EPFO

Step 3: Then, the EPFO will start the process to transfer of balances into the EPF account

Step 4: The EPFO will issue a cheque or draft on behalf of the NPS Nodal Office, if the person is a government employee, or on behalf of the PoP collection account, if the person works with a private company

Step 5: The Nodal EPFO Office will release a report to the employer specifying the amount being transferred to the employee's NPS tier 1 account

According to Good Returns, over the last 10 years, the return offered by NPS has been about 10 per cent, if a person contributes 50 per cent of his NPS investment contribution and 50 per cent of government securities. On the other hand, the EPF offers 8.5 per cent interest to its members.

first published:December 13, 2020, 10:04 IST