How to transfer EPF to NPS?

1. How to transfer EPF to NPS? If you are looking for “How to transfer your funds from EPF to NPS?” you are at the right place. In this blog-post, we will discuss each step in detail. EPF and NPS are two retirement savings programs in India. EPF has been here since 1952, while NPS was introduced in 2004. Initially, NPS was only for government employees. While private sector employees had to do with EPF. But from 2009 NPS is open to everyone. Together with the central government and state government employees, everyone can sign up for the national pension system. You can consider NPS more lucrative because it has the potential to give you a better return than EPF. But if you are an EPF member, it was not possible to transfer the EPF balance to the NPS system. There were many obstacles. But now it is possible. The government announced this flexibility in the budget for 2016-2017. However, the EPF transfer modality to NPS has been released after a long time. What is EPF? Before going into the details of EPF to NPS transfer,let’s discuss the EPF scheme. EPF is a retirement savings program. The Government of India manages this program through the Employee Provident Fund. The principles of the EPF system are created by law. The government came with an EPF file on the principles and details of this system.

2. According to the EPF act, each organization or company must participate in the EPF program if it employs 20 or more people. Because of this right, every small and large company in India is part of the EPF program. The EPF program requires regular saving for retirement. Each employee must dedicate 12% of his remuneration to this program. The employer must also pay 12% of the employee's remuneration. Thus, 24% of the employee's remuneration is allocated to the EPF program. The amount of investment, refund, and withdrawal of EPF are tax-free. Let’s explain that the EPF program also includes a pension and insurance system. Part of the employer's contribution is used

3. for the employee retirement plan (EPS) and the employee deposit. What is NPS The national pension program or NPS is to replace, in the first place, the government pension scheme. In fact, the government wanted to get rid of the heavy burden of retirement. That's why he developed a retirement program that is funded by the employee himself. Like other global pension systems, the government has increased investment flexibility. In this system, the government does not guarantee a permanent pension. It is rather a scheme of a common fund, which gives everyone a different amount of retirement. The amount of the pension depends on the return of the investment. However, in contrast to investment fund systems, KSE is strictly regulated and monitored by the PFRDA (Regulatory Authority and Development of the Pension Fund).

4. In the NPS scheme, you must invest at least 6,000 a year. The government and the corporate employee invest in this program every month. Usually, the employer brings a similar amount. The NPS subscriber is free to allocate his investment as desired. The subscriber can decide how much he wants to invest in shares or bonds. However, this flexibility has limitations. You cannot invest the entire amount in shares. Along with the flexibility of asset allocation, you also have the option of choosing a fund management company. Many companies invest money in the bond and stock market. These companies must comply with the investment standards formulated by PFRDA. A government employee does not have the full freedom to choose a fund management company, rather he must choose from government investment fund companies. Me. LIC MF and UTI MF. The NPS contribution is free of tax under section 80C. 40% payment after retirement is also tax-free. The amount of rest is used to grant a pension. This pension is taxable if it exceeds the duty-free limit. Comparison of EPF and NPS:

5. Comparison of EPF and NPS with regard to various parameters, such as asset allocation, returns, liquidity, tax breaks, etc. It can provide answers to some of these questions. Asset allocation/investment EPF invests most of its funds in government securities, bonds, debt securities and only a small part in an equity instrument. On the other hand, NPS may invest up to 50% of its corporation fund in an equity instrument. In addition, NPS provides flexibility to individuals in the selection of the fund manager and asset portfolio. Returns EPF calculates annual interest on the fund's balance at the rate reported for each year - in the last three years the rate ranged from 8.75% to 8.80%. In comparison, NPS does not offer any guaranteed return to its subscribers. According to the annual report issued by the NPS Trust for the financial year 2015-16, since the inception, the return offered under the various programs ranged from 7.86% to 14.30%. Liquidity/withdrawal If the employee terminates employment and does not take up another employment within two months with an employer

6. registered under the EPF, the entire fund balance in the EPF may be paid as a lump sum. This provides easy liquidity for a person who may want to use EPF funds to start a business or other needs. However, an employee under the age of 60 may only pay 20% of the fund's balance in the form of a lump sum. The balance transfers to the pension plan, from which the employee receives a monthly retirement pension after retirement. An employee who is 60 years old or more may pay a maximum of 60% of the fund's balance in the form of a lump sum. Tax benefits While the payment from EPF is completely tax-free, provided that the employee provides continuous services for 5 years or more, the lump sum payment from the NPS is tax-free only up to 40% of the entire corps. For employees, the EPF was in the past the most-privileged pension savings system with mass insurance. NPS has not yet gained popularity among employees. Both systems have their advantages and disadvantages, and the decision to choose one of them will be difficult for many. While the government promotes NPS as the future of social security for employees in India, NPS will still have to win the trust of many to get more subscribers.

7. EPF to NPS transferring process: The process requires only the acceptance of the EPF corps on the NPS account. PFRDA has issued these steps. Open an NPS Tier-I account: To receive the EPF amount, you must have an NPS account. You can open an NPS account through your employer. People who do not have an employer or NPS center can open an NPS account via POP. There are many POPs available. An NPS online account opened via eNPS also qualifies for EPF balances. POP: Point of Presence. Banks and financial companies act as an attendance point. These companies process the NPS application, subscription, and premium. POP is an interface for all NPS transactions. However, eNPS, i.e. online service, does not require POP. POP branches are called POP-SP (point-of- service provider) Send a request to the employer: If you are a government or private employee, you must apply to a recognized pension fund or pension fund. You can do this through your employer. EPFO or Trust Process Process Application: The savings fund or pension fund initiates the transfer of funds. After the appropriate process, he would give the EPF body. Issuing DD: In the case of a government employee: Nodal Office Name (name PAO or CDDO) <> Employee name <> PRAN Get an EPF transfer letter: EPFO or Trust would also issue a letter informing about the transfer of EPF to NPS. You must get this letter and send it to your current employer or POP. This letter is proof that your lump sum NPS contribution belongs to the EPF account. Contribution to the NPS account: After sending the EPF transfer letter with the cheque, the NPS or POP nodes will update the NPS account with the latest contribution.

8. Remember: The EPF to NPS transfer is not eligible for a tax deduction because it is not the original investment. It's just a transfer, so it does not take advantage of any additional tax benefits.  You must have an active NPS account. The EPF transfer amount would go to the level I account.  The amount of the EPF transfer should be redirected by the employer or POP. ENPS subscribers must go to POP- SP to send an EPF / DD check. Unlike the EPF, you will not get the entire corps after retirement, and you will receive only 40% of the amount. The amount of 40% -60% will be used to provide a regular pension. You can receive 20% of the amount in 10 instalments up to 70 years old.