Changes in PF withdrawal rules
There may soon be a major change in the rules related to Employee Provident Fund (EPF). EPFO (Employees’ Provident Fund Organization) has proposed some new reforms on October 13, which claim to make the claim process easier and transparent. However, there is increasing concern among the employees regarding these changes, because now after losing the job, they may have to wait longer to withdraw the full amount.
Withholding of 25% amount after leaving the job
Till now if an employee leaves the job, he could withdraw up to 75% of the amount from his EPF account after one month and the entire amount after two months. But according to the proposed rules, after leaving the job, employees will be able to withdraw only 75% of the amount immediately. They will get the remaining 25% amount only after 12 months. This rule is a cause of concern for those people who are completely dependent on their deposits after losing their job.
Now everyone will also get employer’s contribution
However, one good thing is that now employees will be able to withdraw not only their contributions and interest, but also the amount deposited by the employer. Earlier this facility was available only at the time of complete withdrawal, but now it can be included in partial withdrawal also.
Reasons for withdrawal now simplified
EPFO has also proposed to ease the rules for partial withdrawal. Till now there were 13 different reasons for partial withdrawal, but now these have been divided into only three categories. First are essential needs (like illness, education, marriage), second are home-related needs and third are special circumstances (like disaster, lockdown, epidemic, etc.).
Additionally, withdrawals for reasons such as education and marriage will be permitted again and again. Now partial withdrawal can be made up to 10 times for education and 5 times for marriage, which was earlier possible only 3 times. At the same time, the minimum period of service for withdrawal from EPF has now been reduced to 1 year. This will also make it easier for new employees to access their money.
Now the wait for pension withdrawal is 36 months
EPFO has also made changes in the withdrawal of pension amount. Employees who have not completed 10 years of service and want to withdraw pension prematurely, will now have to wait for 36 months i.e. three years. Earlier this time was only 2 months.
The purpose of this change is that people should not close their PF account too soon and can avail the benefits of pension and social security for a long period. According to statistics, 75% people close the account before 10 years, due to which they are deprived of future pension.
Protecting savings or making a stop in need?
The government says that these new rules are aimed at ensuring better savings for employees’ retirement. But the ground reality is also that people may be deprived of their own money at the time of job loss or financial crisis. Financial experts believe that these rules may provide long-term security, but may harm employees facing short-term cash crunch.