The central government is preparing to provide significant relief to members by changing EPFO rules. Under the proposed plan, members will be able to withdraw their entire PF balance at any time in the future. Currently, limited withdrawals are allowed for reasons such as marriage, housing, and education. Once the changes are implemented, millions of people will get easy access to funds without taking loans.
EPFO: The central government is preparing to significantly relax the rules of the Employees' Provident Fund Organisation (EPFO) within the next year. Currently, members can withdraw their full amount only upon reaching retirement age (58 years) or after two months of unemployment. However, following the proposed changes, members will be able to withdraw their entire balance at any time for purposes such as housing, marriage, and education. Officials state that this is the members' money, and they should have complete freedom to use the funds according to their needs. However, the timeline and details have not yet been finalized.
What Do the Current Rules Say
Currently, two conditions are stipulated for the complete withdrawal of funds deposited in EPFO. First, when a member retires after completing 58 years of age. Second, when an individual remains unemployed for more than two months. Apart from these two situations, complete balance withdrawal is not permitted.
Furthermore, withdrawal limits are also set for needs such as education, marriage, and house construction. For instance, for marriage or children's education, an employee can withdraw only up to 50% of their contribution and the interest accrued thereon. For buying or building a house, up to 90% of the amount can be withdrawn, but it is mandatory to have completed at least three years of service for this.
Restrictions on Marriage and Education Withdrawals
If money needs to be withdrawn from an EPF account for the marriage of a sibling or children, at least seven years of service must be completed. Only then can an employee withdraw half of their contribution and the interest accrued thereon.
Similarly, the same condition applies to children's education. Up to 50% of the amount can be availed for post-matriculation education expenses, but here too, seven years of service is mandatory.
Rules for Buying a House
If a member wishes to buy a house, there is some relief for them. The property should be in the name of the member, their spouse, or jointly. In such cases, an employee can withdraw up to 90% of the amount. However, it is necessary to have at least three years of service experience for this.
Proposal for Withdrawal Every Ten Years
According to reports, the government is also considering giving members the freedom to withdraw their full amount or a part of it every ten years. This would give members greater control over their funds and allow them to use them according to their needs.
What is the Government's Intention
According to media reports, officials of the organization stated that this money entirely belongs to the members, and they should have complete freedom to use it. Officials clarified that they do not wish to impose any restrictions but rather want to create flexible rules.
Existing Challenges
Currently, several challenges arise regarding EPF withdrawals. On one hand, there are restrictions such as minimum service period and withdrawal limits, while on the other hand, extensive documentation is required for every process. This becomes a cause of trouble for people in the lower and middle-income groups. Often, they need money urgently, but due to the rules, they are unable to withdraw their funds on time.
