When you leave your job, quite a few folks assume that Provident Fund (PF) balances stop earning interest. That’s not quite right. An EPF account continues to earn interest for a limited period after you have ceased to finish paying contributions. Knowledge of this process can help you make sure that you are not losing out on some money by negligence.
A Period For Which Interest Is Credited
Post your last contribution, the EPF balance continues to earn interest for 36 months, i.e., three years. After that period, the account is considered inactive (or inoperative) and stops accruing any interest. So, if you leave work, your money continues to earn interest for three years from your last PF contribution.
What Happens After Retirement
The rules are similar once you retire too: your EPF account will earn interest for three years post-retirement, after which it becomes inactive and no new interest is credited. While the interest stops at that point, your PF balance remains secured: you do not lose the amount so far accumulated.
Interest Rate & Contributions
For the year 2024-25, the interest rate applicable on EPF balance was 8.25%. Contributions to EPF are made from both sides-that is, you and your employer-who each deposit a part of the basic salary every month into the accounts. Contributions and interest together constitute your PF balance.
What It Means For You
If you have resigned, here is a few things to bear in mind so that you do not lose out:
- PF interest is not stopped right after your employment ends. You have to take advantage of the three years grace period.
- Utilize the same three-year period in case of retirement.
- After the three years, no further interest on your PF balance will accrue unless it will be either reactivated or withdrawn.
- Keep a track of your last contribution date so that you can be clear when the said three years ends.
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