In a significant decision, the retirement fund body Employees Provident Fund Organization (EPFO) on Tuesday gave more flexibility to subscribers for withdrawing their employee provident fund (EPF) kitty. EPFO subscribers will now be given the option to partially withdraw from EPF kitty after one month of unemployment or leaving the job. The EPF account holder can also keep its account active with the EPFO. The latest move will benefit about 5.5 crore subscribers. EPFO manages a corpus of over Rs 10.5 trillion.
Here are five things to know about the new provident fund (PF) withdrawal rules:
1) Currently, an EPFO subscriber can withdraw the accumulated funds in EPF kitty after two months of unemployment and settle the account in one go.
2) Under the new EPF withdrawal rules, EPFO subscribers will be given the option to withdraw 75% of accumulated corpus after one month of unemployment and at the same time keep the account active.
3) Also under the new rules, EPFO subscribers will have the option to withdraw the remaining 25% of their funds and go for final settlement of account after completion of two months of unemployment.
4) "We have decided to amend the scheme to allow members to take advance from its account on one month of unemployment. He can withdraw 75 per cent of its funds as advance from its account after one month of unemployment and keep its account with the EPFO," said Labour Minister Santosh Kumar Gangwar, who is also the Chairman of EPFO's Central Board of Trustees. Central Board of Trustees is the apex decision-making body of the EPFO.
5) The new rules would give an option to subscribers to keep their account with the EPFO, which they can use after regaining employment again. "We are trying to give subscribers a window to take out a sizable portion of the corpus, yet not close the account. When he gets a new job, he can transfer the old account money to the new account with the new employer," said central PF commissioner V.P. Joy.
Currently, an EPFO subscriber needs to contribute to his EPF account consecutively for at least 10 years to become eligible for pension. However, if a person closes his or her EPF account two months after losing a job, it may affect the person's pension eligibility.
In another development, the central board of EPFO has also sought the approval of the finance ministry before deciding on diversifying its equity portfolio beyond the Nifty 50 and Sensex 30 stocks. The EPFO had started investing in ETFs in 2015 with a mandate of investing 5% of its investible deposits in the equity-linked schemes. The proportion was increased to 10% in 2016-17 and 15% subsequently in 2017-18.
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