Dear friends, I need your advice regarding Provident Fund:

1) Since 1/4/2004, in my present job, I have been contributing 50% and for last 2 years 100% (of Rs.6,500) per month to the Provident Fund Scheme and the Employer has been contributing Rs.780 per month. The latest balance in my account is about Rs.3.5 lakhs employee’s contribution and Rs.58,000 employer’s contribution.
2) I will be resigning from this company and shall take up the next job after a gap of 2 months.
Hence, I may have the possibility of withdrawing both employee’s plus employer’s contribution after 2 months. If I do not withdraw, in another year (after completion of about 10 years), a significant part of the accumulations in my account will go into the Pension Scheme, where the returns are very low.
3) I am 51 years old, unmarried, with an 82-year old mother, but do not require funds for any emergency presently.

Kindly offer your valuable guidance if, in my case, I should withdraw the provident fund accumulations or transfer the balance amount to the Provident Fund account in my new job, even if it means opting for the pension scheme. I am unable to make up my mind.

The points in favour of transferring the provident fund accumulations and going in for the pension scheme seem to be:
1) Disciplined investing for retirement. Most personal finance articles are advising never to touch/withdraw provident fund/pension accumulations as they are meant for retirement. 
2) Accumulations are tax-free. If I invest the maximum available Rs. 1 lakh in PPF per annum, the next available alternative of tax-free and “safe” investment is Employees Provident Fund. If I withdraw the corpus from my account, I will have to park the funds in a bank fixed deposit which will give about 9.5% interest per annum but the interest will be taxed.
3) The amount going into the pension scheme is insignificant, Rs. 541 per month. In my whole life, I will have transferred about Rs.541*12months*16years = about Rs.1.4 lakhs. Instead of treating this as an “investment”, it can be treated as a “cost” for “pension insurance”.
4) Apart from the above about Rs.1.4 lakhs, the balance corpus which remains in the provident fund account (@Rs.6,500 per month) is not being transferred and will give me a lump sum tax-free amount on retirement.

The points in favour of withdrawal of the provident fund accumulations, and hence, avoiding the pension scheme seem to be:
1) Withdrawal of the total Rs. 4 lakhs presently available in my provident fund account will enable me to make a bank fixed deposit. It will become about Rs.6-7 lakhs in the next 7 years when I retire.
2) In my second job, I again start contributing Rs.6,500 per month and by the time I am 58 years old, after 7 years, I will have accumulated additional Rs. 6,500*12*7 = Rs.5.5 lakhs plus interest, which comes to about Rs.8 lakhs.
3) Now, this gives me a lump sum of about Rs. 15 lakhs (7 lakhs + 8 lakhs). This, if invested in a bank FD, @9.5%, gives about 1.4 lakhs per annum (taxable).
4) The principal amount, which would otherwise have gone to the pension scheme “comes back” to me. (In pension scheme, the principal amount is never returned.)

The point which is neither in favour or against transfer or withdrawal of the provident fund accumulations seems to be:
Only about Rs. 1.4 lakhs are going into pension. However, some pension will be received per month. This makes the basic query of transfer or withdrawal of provident fund, and subscribing or not subscribing to the pension scheme, a very “subjective and personal” choice. Either way, it is fine. 

I am sorry if my query appears a bit disorganised in presentation and the computations/calculations are only rough and approximate. I look forward to your valuable inputs and feedback.

Thanks and best regards/Kapil Tiwari