EPFO mulls tightening PF withdrawal norms to improve social security cover: Report
EPFO has reportedly proposed that its over five crore members be allowed to withdraw only 60 per cent of their PF or an amount equivalent to three months' salary - whichever amount is lower - if they are unemployed for one month.
The past few years have seen the interest rate on Employees' Provident Fund (EPF) steadily dip from 8.8 per cent in 2015-16 to 8.55 per cent for 2017-18. But it remained a good way to build a retirement nest egg - tax-free to boot after five years of continuous employment. Besides, a major advantage that it offered compared to other retirement products like PPF and NPS was higher liquidity - person could withdraw his/her entire corpus if unemployed for over two months.
But, according to The Business Standard, concerned with the high level of PF withdrawals, the Employees' Provident Fund Organisation (EPFO) is proposing to introduce caps on the amount that can be withdrawn before retirement. The retirement fund body has reportedly proposed that it's over five crore members be allowed to withdraw only 60 per cent of their total savings or an amount equivalent to three months' salary - whichever amount is lower - if they are unemployed for one month.
The proposal adds that should a subscriber be unemployed for more than three months, he/she will be eligible to withdraw 80 per cent of his/her PF savings or an amount equivalent to two months' salary, again the lower of the two. The report claimed that the move is aimed at creating a social security cover for formal sector workers.
Ironically, the retirement fund body had tweaked its rules last April to enable its subscribers to withdraw a higher amount - up to 90 per cent - from their PF savings to make down payment and pay EMIs to buy homes.
This is not the first time that the government has attempted to tighten PF withdrawal norms. Back in 2016, the Labour Ministry had issued a notification restricting 100 per cent withdrawal of provident fund by members after unemployment of more than two months and had proposed to bar PF withdrawal until an employee attains the age of 58 years. But following the huge backlash from trade unions and other stakeholders, the idea was dropped.
If you want to dip into your PF savings while you still can, here's how you can do it through the EPFO portal:
Withdrawing PF online
1. Go to EPFO members' portal and log in using your UAN and password.
2. Check your KYC details like Aadhar, PAN and bank details available under the 'Manage' tab.
3. Once satisfied that the required details are correct, select 'Claim' from 'Online Services' tab.
4. Click on 'Proceed For Online Claim' tab on the 'Claims' screen.
5. Choose from PF Withdrawal, PF Advance, or Pension Withdrawal from the drop-down menu under 'I Want To Apply For' tab.
6. Fill in the form that comes up after selecting one of the options from previous step and authenticate it using Aadhar OTP to finish online claim submission.
With PTI inputs