PF account ie Provident Fund is an important means of retirement security for employed people. But it is seen that many employees are repeatedly withdrawing money from their PF, due to which they may have to suffer financial losses in the future.
Frequent withdrawal is less than interest benefits
Compound interest is available every year on the amount deposited in PF account. Whenever money is withdrawn, interest is added to the remaining amount after that. Repeated withdrawal keeps the interest decreasing on the deposit handing, which reduces the long term returns significantly.
The government has provided partial withdrawal from PF for special needs like education, marriage, home building or serious illness, and there are many rules and bar limits in them. If the money has already been withdrawn again and again, then there may be a problem in withdrawal at the necessary time in future.
Tax mess
If employees withdraw money from PF account before 5 years, then tax on withdrawal also has to be paid. Due to withdrawal, tax related paperwork and TDS deduction can also increase, which reduces the amount of saving.
No help in emergency
If the withdrawal is done repeatedly, then the amount in the time of medical emergency, leaving job or retirement-PF account remains less or empty. In such a situation, this money does not work at the time of the real need for withdrawal and the risk of financial crisis increases.
Impact on retirement scheme
The greatest strength of PF is its retirement fund. Retirement funds remain small due to frequent evacuation, which may lead to lifestyle compromise or postponement.
Repeated money from PF is convenient, but this habit can be harmful to the future in terms of long-term financial security. Experts recommend that the PF amount be protected and use it only in very important circumstances.