EPFO’s Central Board of Trustees Meeting: In a major decision to boost ‘ease of living’ for members, the Employees’ Provident Fund Organisation (EPFO) has allowed withdrawal of up to 100% of the ‘eligible balance’ in the PF account, including employee and employer share. The decision was taken at the Central Board of Trustees’ (CBT) 238th meeting held today in New Delhi.
Union Minister for Labour and Employment Mansukh Mandaviya chaired the meeting, which was also attended by Union Minister of State for Labour and Employment Shobha Karandlaje, Secretary in Labour and Employment Ministry Vandana Gurnani, and Central Provident Fund Commissioner Ramesh Krishnamurthi.
The CBT today took a number of path-breaking decisions during the CBT meeting.
One of the key decisions taken at the CBT meeting was that “members will be able to withdraw up to 100% of the eligible balance in the provident fund including employee and employer share”.
Existing complete PF withdrawal rules
Earlier, the complete withdrawal was only allowed in case of unemployment or retirement. A member was allowed to withdraw 75% of the PF balance after 1 month of being jobless and the remaining 25% after 2 months. On retirement, however, the full balance was allowed to be withdrawn without any limit.
Maximum partial withdrawal allowed was 90%
In case of partial withdrawal for land purchase, purchase or construction of a new house or EMI repayment, EPF members were allowed to withdraw up to 90% of their corpus lying in their EPF account.
There have been several other major decisions taken by the board to ease the withdrawal rules. The board has decided:
-To enhance ease of living of EPF members, the CBT decided to simplify the partial withdrawal provisions of 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 have been liberalised — education withdrawals allowed up to 10 times and marriage up to 5 times (from existing limit of total of 3 partial withdrawals for marriage & education in all).
– Requirement of minimum service has been uniformly reduced to only 12 months for all partial withdrawals.
No need to specify reasons for partial withdrawals under ‘Special Circumstances’
– Earlier, under ‘Special Circumstances,’ the member was required to clarify the reasons for partial withdrawals viz. natural calamity, lockouts/closure of establishments, continuous un-employment, outbreak of epidemic etc. This often led to rejection of claims and consequent grievances. Now, the member can apply without assigning any reasons under this category.
Members need to maintain 25% minimum balance at all times
A provision has been made for earmarking 25% of the contributions in the members’ account as ‘Minimum Balance’ to be maintained by the member at all times, the labour ministry said in a statement after the board meeting.
“This (25% minimum balance) will enable the member to enjoy high rate of interest offered by EPFO (presently 8.25% pa) along with compounding benefits to accumulate a high value retirement corpus. This rationalization enhances ease of access while ensuring members maintain a sufficient retirement corpus,” the release said.
100% auto settlement of claims for partial withdrawal
There will be greater flexibility in withdrawal process. “Zero need for any documentation” will pave the way for 100 % auto settlement of claims for partial withdrawal and ensure ease of living, the statement said.
Complementing the above, it is also decided to change the period for availing premature final settlement of EPF from the existing 2 months to 12 months and final pension withdrawal from 2 months to 36 months. The liberalisation of partial withdrawals ensures members can meet immediate financial needs without compromising their retirement savings or pension entitlements.