The Centre may soon make a big change in the rules for withdrawal of funds from EPFO (Employees’ Provident Fund organisation) accounts. The retirement fund body floated a proposal that suggests EPFO members be allowed to withdraw their full amount or part of it once every 10 years, according to a Moneycontrol report.
If this proposal goes through, it will provide relief to over 7 crore active EPFO members employed in the organised private sector. The report said that the Centre is mulling easing norms for withdrawal of funds by members post completion of 10 years in service.
The report quoted sources as saying that “this is being considered to help those who wish to retire early and not necessarily wait till the official retirement age of 58 years.” That is, now if a person wants to retire early or leaves the job due to some compulsion, then he will not have to wait till the age of 58 to withdraw his hard-earned money—EPF fund.
Also read: New PF withdrawal rules: Big relief for first-time homebuyers as revised norms allow to withdraw…
Why is a change in EPF withdrawal rules necessary?
Till now, the entire amount can be withdrawn from EPF only when an employee retires at the age of 58 or remains unemployed even after two months of leaving the job. But there are many people who want to shift career at the age of 35-40 or cannot do a regular job due to some reason.
Experts see the move as a significant one as a significant chunk of subscribers never reach retirement age or continue with a formal sector job for that long. That is, there are a large number of EPF members who never do a job in the formal sector till the age of retirement. This proposed rule change can prove to be a boon for such people.
Important changes in EPFO in recent years
The government and EPFO have taken several major steps in the last few years to make PF-related processes more convenient:
Quick withdrawal through UPI (up to Rs 1 lakh)
Now an amount of up to Rs 1 lakh can be withdrawn from the PF account instantly through UPI or ATM. This has made it easier to withdraw money in an emergency.
Auto-settlement limit increased to Rs 5 lakh
Earlier claims up to Rs 1 lakh were automatically settled, but now this limit has been increased to Rs 5 lakh. This eliminates the need for physical verification in small claims.
Number of documents reduced
To simplify the process, EPFO has reduced the number of documents required for claim verification from 27 to 18. With this, the process is now being completed in 3–4 days.
Withdrawal for real estate
Now 90% of the amount can be withdrawn from the PF account, if you have completed 3 years of service and that money is to be used in the down payment or EMI of the house.
Digital change under EPFO 3.0
EPFO is now bringing a new version “EPFO 3.0”, which will include facilities like UPI payment, mobile app, ATM card withdrawal and online service tracking. With this, PF members will be able to avail their services anytime, from anywhere.
CPPS (Centralised Pension Payment System)
Under CPPS, pensioners can now take pension from any bank branch. This facility will be implemented across the country by December 2024.
Who will benefit from this change?
-People who have completed 10 years or more of service in the job, but they no longer want to be in a regular job or want to start something of their own.
-Youngsters who are planning for early retirement or want to pursue studies, startup or freelancing along with the job.
-Women who leave their jobs due to marriage, motherhood or family responsibilities.
Summing up…
Among the various other measures taken by the Centre to ease withdrawal norms for EPFO members, this current proposal seems to be an important one. The government, however, is yet to make any official announcement regarding this proposal, but the report suggests that it is under serious consideration. If this proposal is implemented, it will prove to be a big relief for crores of EPF account holders.