EPF / PF to NPS Transfer

On March 6th 2017, PFRDA (Pension Fund Regulatory and Development Authority) in india has issued detailed instructions about transferring money from EPF to NPS.

EPF is india's primary social security scheme for private sector and at this moment has more than 6 crore members. Though EPF primarily invests in debt - thus giving interest in the order of 7 to 10%. NPS (National Pension Scheme) is indian govt pension scheme. In comparison to EPF, in NPS, the employee can select one of many ways of investment and can choose a plan that invest in equity. Due to this, the effective interest in NPS has been better than EPF during last few years.

If you are open to taking the risk of investing in equity, then NPS can

EPF to NPS Transfer

Before transferring your accumulated money in EPF to NPS, the member need to make sure of following:

  • Member should have an active NPS Tier-1 account (If you don't have, you can open one by visiting public bank or even online at e-nps website)

To do the transfer, the employee will need to submit a request letter for transfer mentioning that his PF money should be transferred from PF to NPS Tier-1 account. The employee/member need to submit this request to the PF fund through his/her employer.

On receiving the request, the PF fund will process the request and will issue the cheque for the accumulated money in the member account. This cheque will mention the member's NPS PRAN number. The employee/member will then be able to deposit this cheque in his/her NPS account.

More details about exact format of request letter and timeframe for transfer are still not clear. We will update this article as more details emerge.

EPF to NPS Transfer - Tax Issues

PFRDA has clarified that there won't be any tax issues while switching from EPF/PF to NPS.

  • The amount transferred from PF/EPF fund to NPS will not be treated as income of the current year and is hence not taxable
  • The transfered PF/EPF money will not be treated as contribution of the current year by employee/employer and accordingly the subscriber would not make I-T claim for contribution for this transferred amount.
Category: finance epf