Access made easier, but with caution to avoid retirement corpus depletion

Members should continue saving separately for housing, kids’ education and wedding

- HIMALI PATEL

The Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) has overhauled its withdrawal framework.

The move makes access to the Employees’ Provident Fund (EPF) corpus easier but also requires members to exercise caution to avoid eroding their retirement corpus.

Withdraw up to 100 percent of balance

Members can now withdraw upto 100 per cent of their eligible provident fund (PF) balance. Eligible PF balance refers to the total amount built up in the EPF account —the member’s and the employer’s contributions, and the interest earned on both. “Full withdrawal is allowed only in specific cases like retirement, permanent disability, or if someone remains unemployed for more than 12 months,” says Ajay Kumar Yadav, group chief executive officer and chief investment officer, Wise FinServ.

Minimum balance of 25 percent

Members must maintain 25 per cent of their total contributions as minimum balance, which will continue to earn interest (currently 8.25 per cent). The 100 per cent withdrawal provision and the 25 per cent minimum balance provision have led to some confusion.

“For partial withdrawals or within the first 12 months after a job loss, you are required to keep 25 percent of your EPF balance in the account,” says Rajani Tandale, senior vice president - mutual fund, 1 Finance. She explains that in final settlement cases, a subscriber may withdraw 100 per cent.