The Central Board of Trust (CBT) of the Employees’ Provident Fund Organization (EPFO) recently held a meeting. In this, some rules were relaxed and some were tightened a bit. But some confusion has arisen regarding these changes. Especially in the matter of withdrawing money in case of unemployment. To clear up these confusions, the Union Ministry of Labor and Employment has issued a statement. In this the new rules have been explained in detail.
You will be able to withdraw 75% of your balance immediately during unemployment.
EPFO has now decided that if an employee or EPFO member wants to withdraw the entire amount of EPF before maturity in case of unemployment, then the period between his becoming unemployed and withdrawing 100 percent money should now be 12 months. That means he will be able to make full withdrawal only after 12 months. Earlier this period was 2 months. However, he can withdraw 75 percent PF balance immediately. This 75 percent includes the contribution of the employer and employee and the interest received. The remaining 25% balance can be withdrawn after one year.
Full 100 percent withdrawal of PF is also allowed in situations like retirement after 55 years of service, permanent disability, inability to work, retrenchment, voluntary retirement or leaving India permanently etc.
Changes in the rules for partial withdrawal
EPFO’s CBT has given major relaxation to the members in the rules for partial withdrawal i.e. withdrawal of money to some extent. Under the change, 13 types of provisions for partial withdrawal have been merged into a simple structure. Withdrawal up to 100 percent of the eligible amount has been allowed. Now EPFO subscribers will be able to withdraw up to 100 per cent of the eligible balance in their provident fund including employee and employer’s share under partial withdrawal.
The Union Ministry of Labor and Employment says that till now the member or employee was allowed to withdraw only his contribution and interest amount up to 50-100%. Now the EPFO member’s eligible balance for partial withdrawal will include his contribution and interest as well as the employer’s contribution. This means that the eligible amount that can be withdrawn now is 75%, much higher than before.
Minimum service period for partial withdrawal
Now the minimum service period for all types of partial withdrawals has been reduced to 12 months. Earlier the minimum service duration requirement was different in different cases. The maximum period was up to 7 years. But now it has been made 12 months for all types of partial withdrawals.
Why the rule of maintaining 25 percent minimum balance?
EPFO has also decided that members will always have to maintain 25 percent of their contribution amount as minimum balance in the EPF account. This will help in raising retirement funds. Fixed interest will continue to be received. This minimum balance should be maintained in the EPF account at all times. The Labor Ministry says that due to frequent withdrawals of money, the employee’s PF balance remained very low at the time of retirement. To ensure a decent amount of PM at the time of retirement, a rule has been introduced to maintain a minimum balance of 25% in the account.
Now there is no need to give reasons for withdrawal in special circumstances
To simplify the complex 13 provisions of partial withdrawal, 3 categories have now been created. These categories are- essential needs such as illness, education, marriage; Housing needs and special circumstances. Now EPFO subscribers will be able to withdraw their EPF 10 times for education and 5 times in case of marriage. Till now this could be done only 3 times in both the cases. Now there will be no need to give any reason for withdrawing money in special circumstances. Earlier the reasons had to be clarified, such as natural disaster, closure of establishment or company, continuous unemployment, outbreak of epidemic etc. Due to this, claims were often rejected.