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The board of the retirement fund body EPFO has announced liberalised part withdrawals for its over 30 crore subscribers, allowing up to 100 per cent EPF withdrawal.
The Central Board of Trustees (CBT), the apex decision-making body of EPFO, headed by Labour Minister Mansukh Mandaviya, took several path-breaking decisions during its meeting, a Labour Ministry statement said on Monday.
Here are five things to know about the new rules:
Members of the Employee Provident Fund Organisation will now be able to withdraw up to 100 per cent of their eligible balance. This amount includes the employee’s and employer’s share. Before the new rules, employees could only draw up full PF in cases of unemployment or retirement. At the time, a member could extract 75 per cent of the PF after one month of employment and the remaining 15 per cent two months after losing their job. However, under the new rules, the period of full withdrawals has been extended from 2 months to 12 months in cases of unemployment, and from 2 months to 36 months in cases of retirement
To enhance the Ease of Living of EPF members, the CBT decided to simplify the partial withdrawal provisions of the EPF Scheme by merging 13 complex provisions into a single, streamlined rule categorised into three types, namely, Essential Needs (illness, education, marriage), Housing Needs and Special Circumstances
Withdrawal limits for purposes such as education and marriage have been liberalised. Education withdrawals will be allowed up to 10 times and marriage up to 5 times (from the existing limit of a total of 3 partial withdrawals for marriage and education in all)
The government has also removed the requirement to provide a reason in cases of partial withdrawals, as they often led to rejection of requests. Earlier, under ‘Special Circumstances,’ the member was required to clarify the reasons for partial withdrawals, viz., natural calamity, lockouts/closure of establishments, continuous unemployment, outbreak of epidemic, etc.
A provision has been made for earmarking 25 per cent of the contributions in the Members’ account as Minimum Balance to be maintained by the member at all times. This will enable the member to enjoy a high rate of interest offered by EPFO (presently 8.25 per cent pa) along with compounding benefits to accumulate a high-value retirement corpus.