Employees’ Provident Fund Organization (EPFO) has announced major changes in the withdrawal rules. EPFO’s Central Board of Trustees (CBT) approved the proposals related to this on October 13. This will make it easier for crores of people working in the private sector to withdraw money from their EPF account. Subscribers are happy with this. But, experts have expressed concern about some new rules.
Now only three conditions to withdraw money
Now EPFO Instead of 13 conditions for withdrawing money from the account, only three new conditions will be applicable. The first of these is Essential Needs, the second is Housing Needs and the third is Special Circumstances. Essential needs include needs like treatment of illness, marriage and education. Under Housing Needs, subscribers can withdraw money from EPF account to build a house or buy a house. Under special circumstances, subscribers will be able to withdraw money without giving any reason.
10 times withdrawal allowed for education
Under the new rules, now it will be allowed to withdraw money from EPF account 10 times for education related needs and 5 times for marriage related needs. The treatment and special conditions clause allows the subscriber to withdraw money 3 times and 2 times respectively in a financial year. Experts say that EPFO has made these changes in the rules in the interest of the subscribers. Crores of people will benefit from this.
Concern over the rule of 100 percent withdrawal of money
EPFO’s CBT has taken a big decision that subscribers will be able to withdraw 100 percent money. However, they will have to maintain 25 percent of the money in the EPF account. Therefore, they will be able to withdraw practically 75 percent of the money. Experts say that this change in rules is not right. He also believes that this is not in the interest of the subscribers. Their argument is that this is tantamount to obstruction of the biggest objective of EPF.
Money deposited in EPFO is useful after retirement.
Experts argue that the employee gets the money deposited in EPF at the time of retirement. This fund becomes very useful for post-retirement expenses when the salary stops coming into the person’s bank account every month. EPF money is not meant to meet short term needs. It is a social security that provides financial support to a person in old age. Permission to withdraw 75 percent of the money may create apprehensions about the employee having a huge fund at the time of retirement.
Withdrawal of 75% will not result in huge funds at retirement.
There are no comprehensive social security arrangements in a country like India. In such a situation, a scheme like EPF provides financial security to a person when the source of regular income stops. If an employee makes repeated withdrawals during his service period, it means that he will not have much money left in his EPF account at the time of retirement. Due to this, he will not get a big fund at the time of retirement. This may increase his difficulties.