Amid criticism from various stakeholders, including members, over the decision regarding the window to allow final settlement of EPF and EPS funds in case of unemployment, the Employees’ Provident Fund Organisation (EPFO) has come out with another clarification. Now, the EPFO is saying that members can withdraw up to 75% of their EPF corpus “immediately” if they lose their job. But, pension fund accumulation can be withdrawn only after 36 months in case of job loss.
Earlier this week, on October 16, the EPFO held a meeting of the Central Board of Trustees (CBT), the highest decision-making body of the retirement fund organisation, which after the meeting categorically said that it was decided by the board “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.”
For the uninitiated, under the existing EPFO rules, members were allowed to withdraw 100% of funds from both the provident fund and pension scheme (EPS-95) in case of unemployment. As per rules, from the employer’s 12% contribution towards a member’s retirement corpus, 8.33% goes towards EPS and 3.67% goes to EPF. The member becomes eligible for pension under the EPS-95 scheme once he or she completes 10 years as an EPFO member. If this period is less than 10 years, the member is allowed to withdraw the pension fund amount along with the EPF amount.
Now, coming back to what has unfolded over the last four days since the EPFO meeting, there is a lot of confusion among subscribers regarding some points and decisions taken at the meeting. One of the key points is the change in the period for availing premature final settlement of EPF in case of unemployment.
EPFO’s latest clarification on final PF settlement period
In a social media post, the EPFO has tried to clear the air once again, saying that it’s a myth being circulated that members are not allowed to withdraw their funds if they lose their job. In fact, 75% of the PF corpus is available for withdrawal immediately in case of joblessness, and the remaining 25% after 12 months.
“Myth: You cannot withdraw your EPF even if unemployed. Fact: Members can withdraw up to 75% of their balance immediately if unemployed, without any waiting period. The remaining 25% can also be withdrawn after 12 months,” the post on ‘X’ reads.
It is again not clear what the EPFO means by the word “immediately,” as currently, members have to wait for two months to withdraw their EPF and EPS money in case of unemployment. Does “immediately” mean they will be able to withdraw their 75% fund just after becoming unemployed?
There’s also confusion as the Ministry of Labour, in a PIB release, has said that the entire PF balance, including the minimum balance of 25%, can be withdrawn in certain cases, including retrenchment and voluntary retirement. It means if someone is terminated from the job, he will be able to withdraw 100% of his PF corpus. Here, more clarity is needed.
“In case of unemployment, 75% PF balance (that includes employer and employee contribution and interest earned) can be withdrawn immediately. Remaining 25% can also be withdrawn after one year. Full withdrawal of the entire PF balance (including the minimum balance of 25%) is also allowed in case of retirement after attaining 55 years of service, permanent disability, incapacity to work, retrenchment, voluntary retirement, or leaving India permanently etc.,” the PIB release said.
EPS money can now be withdrawn only after 36 months into unemployment
So, the new rules mandate that members will be allowed to withdraw EPS or pension fund only after 36 months of unemployment against the earlier 2 months.
“In order to encourage members to meet the 10-year eligibility for getting pension and to allow his/her family to be eligible for benefits in case of his/her death, the proposed provision allows the member to withdraw pension accumulation after 36 months instead of 2 months. This will ensure long-term social security in the form of pension for the member and his family.
Here’s what the CPFC chief said a day earlier
Ramesh Krishnamurthi, Central Provident Fund Commissioner (CPFC), in a TV interview, did not mention that 75% of the EPF money will be available for withdrawal immediately, as the social media post from the retirement fund body clarified today.
When asked about the decision, Krishnamurthi said that for unemployment, “you were forced to take final settlement… and you had to exit your PF membership. What was happening was that we were finding that people were exiting their full EPF membership, they would wipe out their PF balance completely, and they would rejoin after some time. In the process, they were losing out on a very important component that is pensionable service.”