Planning a job switch? Have a look at financial planning before you do

Changing jobs is exciting, but needs financial planning. When moving to a new employer, ensure a smooth transition and protect your finances. Here are key tasks, from transferring your Provident Fund (PF) account to understanding your ‘full and final’ settlement, you must undertake before you join a new employer.

Transfer your PF account

People whose Universal Account Number (UAN) is linked and fully compliant with Know Your Customer (KYC) requirements will have their Employees' Provident Fund balance automatically transferred to their new employer's PF account.

Make sure your UAN is activated and your Aadhaar and bank details are updated in the EPFO database. The online PF transfer process is quick and convenient, allowing you to consolidate your retirement savings.

 

Obtain your Form 16

Form 16 is a document that summarises your annual Income Tax deductions. Request the document from your employer well in advance, as it will be needed for filing your Income Tax return. Having your Form 16 handy will make tax filing smoother when you start your new job.

Understand your full and final settlement

When you resign from your current job, your employer will provide you with a full and final settlement (FnF). This includes clearing any outstanding dues, such as salary, leave encashment, gratuity, and your Provident Fund balance. Review the FnF details carefully to ensure you receive all your rightful dues.

Understand your gratuity eligibility

If you have worked at your current company for five years, you are eligible for gratuity. This amount will be part of your FnF settlement.

Clear any outstanding loans

If you have any outstanding loans or advances from your current employer, make sure to clear them before your last day. This will help avoid any deductions from your final settlement and ensure a clean financial slate as you move to your new job

Review your insurance coverage

Verify your current health insurance and check if your insurance policies are transferable to your new employer. If not, you may need to purchase new coverage, so it's essential to research and compare options in advance.

 Manage your finances carefully

During job transition, be mindful of your expenses and try to maintain a healthy financial cushion. Avoid making major financial commitments or purchases until you have settled into your new role and have a clear understanding of your new salary and benefits.