The Employees' Provident Fund Organisation (EPFO) has introduced significant changes to the rules governing PF and pension withdrawals for its millions of members. These major decisions were made during a Central Board of Trustees meeting chaired by Labour Minister Mansukh Mandaviya, impacting both employed individuals and those recently rendered jobless. While some changes offer relief, others impose stricter conditions.
Easier Partial Withdrawals for Specific Needs
Starting with the good news, EPFO has simplified and unified the rules for partial withdrawals from PF accounts for specific needs, while now, members can withdraw funds for critical illnesses, children's higher education, marriage, or purchasing a home after completing just 12 months of service. This is a considerable relief, as previously, different needs had varying and often longer eligibility periods. For instance, buying a home earlier required a minimum of five years of service.
25% of Your PF Contribution Now Permanently Locked
One significant new condition mandates that 25% of an employee's own contribution to their PF account must always remain in the account and can't be fully withdrawn. The organisation argues this rule is in the members' best interest, ensuring they continue to benefit from the attractive 8. 25% interest rate and maintain a minimum saving for retirement. However, it also means a substantial portion of an individual's hard-earned money will remain inaccessible for a long period.
The most concerning change impacts individuals who lose their jobs. Previously, unemployed members could withdraw their entire PF balance after a two-month waiting period. This period has now been extended to 12 months, creating a significant financial burden during a period of unemployment. Similarly, pension withdrawal rules have also been made much stricter. The waiting period for withdrawing the full pension amount has been increased from two months to 36 months (three years).
Digital Initiatives and Relief Measures
Alongside these revised withdrawal norms, EPFO has pledged to enhance its. Digital services, aiming for automated, paperless claim settlements in the future. Also, the 'Vishwas Yojana' has been launched to reduce litigation related to penalties imposed on employers for delayed PF deposits. Pensioners will also benefit from a new facility allowing them to submit digital life certificates for free from home.
