Move to stop premature withdrawals will ensure social security for workers in old age.

 

The government is planning to put a cap on premature withdrawal of provident fund (PF) money. The move is aimed at ensuring social security for all in old age.

The Employees' Provident Fund Organisation (EPFO) has proposed that an employee be allowed to withdraw only 75% of the overall kitty, instead of 100% as permitted under the existing Employees' Provident Funds Scheme, 1952, in case of resignation from a job or for any other use before retirement.

The change, once implemented, will impact working people who tend to withdraw PF money between jobs or those planning to use it for either buying a house or for paying medical bills or for children's higher education or wed dings. "The provision of 100% withdrawal at any time is being misused to a large extent. The idea of a PF account is to ensure social security for workers in old age," Central Provident Fund Commissioner K.K. Jalan said last week.

Meanwhile, to stem a possible exodus of subscribers to the NPS, the EPFO has proposed an increase in benefits from the Employee's Deposit Linked Insurance Scheme (EDLI), benchmarking it to deposits under the PF account. "EPFO is exploring options to incentivise subscribers to keep money in PF accounts," Jalan said. "We want to enhance the insurance benefits under EDLI to 30 times the monthly wage as against 24 times now."