The Union Ministry of Labour and Employment on Wednesday clarified that members of the Employees’ Provident Fund Organisation can withdraw 75% of the corpus immediately after leaving their job. The entire amount can be withdrawn if an individual remains unemployed for one year, it added.
The clarification was issued amid criticism on social media after the ministry, which oversees the Employees’ Provident Fund Organisation, announced on Tuesday that it had increased the period for the final settlement of the funds to 12 months from two months.
It said that members of the EPFO would be able to apply for full withdrawal of funds from their provident fund accounts only after 12 months of being unemployed.
Similarly, withdrawal from the pension accounts will be allowed only after 36 months. Final pension withdrawals are currently allowed after two months of unemployment.
A member of EPFO who has been unemployed for at least one month is allowed to withdraw up to 75% of their provident fund balance under the present rules. Those who remain unemployed for two consecutive months are allowed to withdraw the entire balance.
Ministry flags ‘misleading’ claims
In its statement on Wednesday, the ministry said that a social media post had made “misleading” claims about the reforms and provisions under the EPFO.
“The post distorts facts related to withdrawal rules, eligibility conditions, and access to members’ provident fund balances, creating confusion among subscribers,” it said.
The ministry said that the decision on Monday “reflects a fine balance between very liberal and simplified withdrawal options for various needs with a decent corpus at the time of retirement”.
The Centre said that full withdrawal of the entire fund balance, including the minimum balance of 25%, is also allowed in case of retirement after attaining 55 years of service, permanent disability, incapacity to work, retrenchment, voluntary retirement or leaving India permanently, among other reasons.
It said that earlier, frequent withdraws led to breaks in service, because of which many pension cases were rejected, and at the time of final settlement, employees were left with little money.
The new guidelines had attracted criticism on Tuesday, with Opposition members and experts pointing out that the longer settlement period will cause hindrances to those who lose their jobs and require their funds immediately.
Other changes in withdrawal rules
The Ministry of Labour and Employment on Tuesday had also announced that the categories for withdrawing funds have been reduced from the current 13 to three: essential needs (illness, education and marriage), housing needs and special circumstances.
“Earlier, under ‘Special Circumstances,’ the member was required to clarify the reasons for partial withdrawals, viz, natural calamity, lockouts/closure of establishments, continuous unemployment, outbreak of epidemic etc,” stated the ministry. “This often led to rejection of claims and consequent grievances. Now, the member can apply without assigning any reasons under this category.”
It also announced that the partial withdrawals can now be made ten times for education and five for marriage.
The existing rules allowed three partial withdrawals for marriage and education combined.
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