PF account holders who opt for higher pension of EPFO may have to bear these big losses. So let us tell you what could be the disadvantages.
EPFO: Companies deduct some money from the salary of employed people for Provident Fund (EPFO) , which they get lump sum after retirement. But perhaps people know that in this scheme, along with provident fund, their post-job pension can also be included. If death occurs while in service or after retirement , then the nominee gets the money, although its amount is half.
EPFO has given an opportunity to its account holders to get higher pension after the order of the Supreme Court. But, before taking it, you must know its pros and cons. While on one hand there are many advantages of this scheme, on the other hand there are many disadvantages of this scheme as well.
According to the order of the Supreme Court, the employees who have opened EPF account before September 1, 2014, will be given the option of higher contribution for higher pension. According to experts, PF account holders who choose higher pension may have to bear 5 big losses. So let us tell you what could be the disadvantages.
Full money will be transferred
The money deposited in your EPF account will be transferred to the Pension Fund. This will end the compound benefit available on your PF account. Actually, under the rules of higher pension, a large amount of contribution from the employer has to be put in the pension scheme. This means that a large part of the amount deposited in the PF account till now will be withdrawn and transferred to EPS.
Money will not come out at once
You will not be able to withdraw all the money at one go from the Employees Pension Scheme (EPS). If you want, you can invest in other government pension schemes like National Pension System (NPS). In this, you get the returns running on the market and you will be able to withdraw the money in lump sum. Apart from this, the investment made in it gives you a rebate of Rs 1.5 lakh under 80C and a further tax rebate of Rs 50,000.
Can’t retire early
Those opting for higher pension in EPS cannot take the option of early retirement. The benefit of EPS scheme is available only when the employee has retired after working till the age of 58 years or has completed 10 years of service.
More loss than less interest
You also get less interest in EPS scheme. Instead, you get more interest on your PF account. At present, 8.10% interest is being received annually on the money deposited in PF.
