According to EPFO rules, if you work in a company for 10 continuous years, you become eligible for a pension under the Employee Pension Scheme (EPS) after retirement. But what if someone worked for 4 years, then lost their job, and took 2-3 years to find a new one? How will their total working years be counted for pension eligibility?
Will your work experience start counting from zero in the new job, or will the previous job period be added to the new one, ignoring the gap in between? This is a common question among employees. Let’s understand the rules clearly so that there is no confusion.
What happens after a long career gap? Know the impact
If you leave a job and there is a long gap before you find a new one, there is no need to worry. Whenever you start a new job, make sure to use the same UAN (Universal Account Number) that you had in your previous company. This way, your new employer will transfer EPF contributions to the same account. Also, your total service period from your previous job will be added to your new job. So, you won’t have to complete 10 years of service again for pension eligibility.
Understand with an example
For example, if you work in a company for 5 years and then lose your job, but after a year, you join a new job, your previous service is not wasted. If you use the same UAN (Universal Account Number) in your new job, the gap of one year will be ignored, and your service calculation will continue from your new joining date. So, if you complete another 5 years in the new job, your total service will be counted as 10 years, making you eligible for the Regular Pension Scheme.
If you haven’t completed 10 years of service
If you haven’t completed 10 years of service and don’t plan to work further, you can withdraw the amount from your Pension Account before retirement age. However, you won’t receive any interest on this amount. Instead, your pension benefits will be calculated using a specific formula based on your total years of service and your last drawn salary. The formula for calculating the EPF pension is: Monthly pension amount = (Pensionable Salary x Pensionable Service) / 70.
