EPFO Rules: Big news for EPFO members. The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organization (EPFO) recently held a meeting. Some rules were relaxed and others were tightened. However, these changes have created some confusion, particularly regarding withdrawals in the event of unemployment. To clear up this confusion, the Union Ministry of Labor and Employment has issued a statement explaining the new rules in detail.
75% of the balance can be withdrawn immediately in case of unemployment
EPFO has now decided that if an employee or EPFO member wishes to withdraw the entire EPF amount before maturity due to unemployment, the period between becoming unemployed and withdrawing 100% of the amount should now be 12 months. This means that the employee will be able to make a full withdrawal only after 12 months. Previously, this period was 2 months. However, 75% of the PF balance can be withdrawn immediately.
This 75% includes the employer’s and employee’s contributions and the interest earned. The remaining 25% can be withdrawn after one year. Full 100 per cent withdrawal of PF is also allowed in situations like retirement after 55 years of service, permanent disability, inability to work, retrenchment, voluntary retirement or leaving India permanently etc.
Changes in partial withdrawal rules
The EPFO’s CBT has given its members a major relaxation in the rules for partial withdrawals. As part of the changes, 13 different partial withdrawal provisions have been merged into a simpler framework. Withdrawals of up to 100 percent of the eligible amount have been approved. Now, EPFO subscribers will be able to withdraw up to 100 percent of their eligible provident fund balance, including the employee’s and employer’s share, under partial withdrawal.
The Union Ministry of Labor and Employment states that until now, members or employees were only allowed to withdraw 50-100% of their contributions and interest. Now, an EPFO member’s eligible balance for partial withdrawal will include their contributions and interest, as well as the employer’s contribution. This means that the eligible withdrawal amount will now be 75%, significantly higher than before.
Minimum service period for partial withdrawal
The minimum service period for all partial withdrawals has now been reduced to 12 months. Previously, the minimum service duration requirement varied from case to case, with a maximum period of 7 years. However, it has now been reduced to 12 months for all partial withdrawals.
EPFO has also stipulated that members must always maintain a minimum balance of 25% of their contribution amount in their EPF account. This will help in accumulating a retirement fund. The fixed interest will continue to accrue. This minimum balance must be maintained in the EPF account at all times. The Ministry of Labor states that due to frequent withdrawals, the employee’s PF balance becomes very low at the time of retirement. To ensure a reasonable amount for the PM at the time of retirement, the rule of maintaining a minimum balance of 25% in the account has been introduced.