New EPFO rules: Over seven crore subscribers of the Employee Provident Fund Organisation (EPFO) will now be able to withdraw up to 100 per cent of eligible funds, including employee and employer share, according to a Labour Ministry release.
The EPFO’s Central Board of Trustees (CBT) on October 13 approved simplifications and liberalised part withdrawals for users, in a meeting headed by Union Labour Minister Mansukh Mandaviya.
“The liberalisation of partial withdrawals ensures members can meet immediate financial needs without compromising their retirement savings or pension entitlements,” it stated.
What is eligible PF balance for withdrawal?
This is the amount in your EPF account that remains after keeping aside the require minimum balance. Thus, in effect, you can withdraw up to 75 per cent of your current Provident Fund balance for various needs.
What is categorised as ‘Special Circumstances’?
As per the release, while users had to earlier declare a reason for partial withdrawal — either for closure of establishment, continuous unemployment, natural calamity or outbreak of epidemic; they can now apply for funds without assigning a reason.
This is because it was observed that many claims were being rejected and led to grievances being raised.
Minimum Balance to be 25% of contribution in account
Further, the board has created a provision requiring that 25 per cent of a user’s contributions be maintained as Minimum Balance at all times. Maintaining this balance allows members to “enjoy high rate of interest offered by EPFO (presently 8.25 per cent per annum) along with compounding benefits to accumulate a high value retirement corpus”.
The rationalisation given was that this step allows ease of access while ensuring a sufficient retirement corpus.
Fund managers approved for debt portfolio
The CBT has also approved four Fund Managers to manage the EPFO’s debt portfolio for a period of five years. The include SBI Funds Management, HDFC AMC, Aditya Birla Sun Life AMC, and UTI AMC.
“This decision marks a significant step towards ensuring prudent management and diversification of EPFO’s investment portfolio, aimed at safeguarding and enhancing returns on members’ provident fund savings in line with the organisation’s long-term investment objective,” the statement added.
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