- Date : 30/07/2018
- Read: 3 mins
Employees’ Provident Fund Organisation (EPFO) scheme allows subscribers to withdraw 75% of their total reserves after 1 month of employment. Read more in detail
A change in the Employees’ Provident Fund Organisation (EPFO) scheme has left subscribers relieved after an announcement on 26th June 2018 stated that after one month of unemployment members can withdraw 75% of their total reserves. After completing two months of unemployment, the remainder (25%) can be withdrawn.
A new provision in the Employee Provident Fund Scheme 1952 incorporates these changes, which came into force after a meeting involving the EPFO’s Central Board of Trustees.
Prior to this enforcement, withdrawal could be made by a subscriber only after two months of being without a job. This often resulted in members withdrawing the entire amount at one go, which often led to the account being closed, ultimately depriving the member of any social security.
The enforcement of the new provision lets subscribers keep their EPFO accounts, which can be used after they are employed again, and concurrently have a form of security to meet financial commitments even when unemployed.
Apart from the reason of unemployment, as per the provisions of Employee Provident Fund Scheme 1952, EPFO subscribers can withdraw their PF balance for reasons such as repayment of a loan, construction/purchase of a house, medical treatment, and for the marriage of brother/sister/son/daughter or self.
Related: How to check your EPF Balance
However, there are certain terms and conditions for partial withdrawal, including a cap on the amount that can be withdrawn at one go. For example, when it comes to marriage, up to 50% of the PF can be withdrawn with interest, only if the employee has had the account for seven or more years.
Furthermore, in the meeting, it was decided that a one-year extension would be given to ETF (Exchange Traded Fund) manufacturers such as Reliance Capital, UTI Mutual Funds, UTI, SBI, etc, up until July 1, 2019. Additionally, the tenure of fund managers has been extended to December 31, 2018.
The EPFO’s investment in ETF is said to have crossed Rs 1 lakh crore. Till May-end of this year, Rs 47,431.24 crore has already been invested, which earned 16.07% return.
Although bodies like the EPFO were permitted by the government to invest in the equity market back in 2008, rules were amended only in April 2015 and a minimum limit of equity investments set at 5%. This was raised to 10% in 2016-2017 and 15% in 2017-2018.