Individuals who hold accounts with the Employees Provident Fund Organisation (EPFO) are now permitted to withdraw 75 per cent of the their EPF account balance one month after resigning or being terminated from employment.
The amendment will allow EPF members to withdraw a considerable amount of money to tackle expenses as well as keep the account active with at least 25 per cent of the balance. The new regulation hence has a dual benefit.
The EPF account is created with the objective to provide financial aid post retirement. According to the previous rules, after crossing the age of 58 years, the member could claim the PF account benefits. But in case the person resigns or is terminated, he/she would have to wait for two months to make a withdrawal. Most EPF subscribers would withdraw the entire amount after two months of unemployment and close the PF account. This would defeat the very purpose of creating an EPF account in the first place i.e. to provide financial aid in the future.
Keeping this in mind, the Central Board of Trustees (CBT) of the EPFO body came to the decision of allowing a 75 per cent withdrawal of funds on being unemployed for a month. The CBT is the prime decision-making body of EPFO and comprises employee representatives, employer representatives, and state government representatives. The labour minister, who is currently Labour Minister Santosh Kumar Gangwar, is the chairman of the body.
The decision regarding EPF account withdrawal was taken in the CBT’s 222nd meeting that was held on 26 June 2018.
The CBT, in the meeting, also decided to provide an extension of terms to two of the fund managers of EPFO – UTI Mutual Fund and SBI Mutual Fund. The term for both the fund managers was to end on 30 June 2018 but is now extended for another year.
Source: Economic Times