According to a report published by Moneycontrol, this could impact over 70 million private-sector active EPFO members. The suggestion would accommodate members being allowed to make one whole or partial withdrawal from their PF account once every 10 years. The goal of the amendment is to provide further flexibility to workers, particularly who quit formal employment early or want to retire prior to the age of 58.
Why The Rule Change Is Being Proposed
Full withdrawal from an EPF account is allowed only on retirement at 58 years of age or after two months of unemployment postresignation. The majority of workers, however, stay in the same job or formal employment for a period lesser than that required for eligibility.
Early exit, switching jobs, or taking breaks these are all realities. The experts propose this rule so that the members can access their savings while they change jobs, in case of emergencies, or if they choose to retire early.
Other Updates Regarding EPFO
Ironically, the said possible full withdrawal option for the 10 years has been changed by EPFO to make PF withdrawal a little bit easier:
- Withdrawing money given below Rs 1 lakh instantly through UPI/Atm: Members have been permitted to withdraw money up to Rs. 1 Lakh instantly through UPI or Atm for emergency need.
- Auto-settlement limit up: Raising has been done in the limit of auto-settled PF claims from Rs. 1 lakh to Rs. 5 lakh, thus, saving a lot of paperwork for the members, too many lengthy hours, waiting for the claim.
Who Gets The Most?
These changes in rules may benefit various sets of EPFO members:
- Members who have been contributing to the PF for over ten years who wish to cash out either a part of their balance or the entire balance without retiring at 58.
- Young or mid-career workers who may exit formal employment or opt to frequent job changes. For them, it’s a way to actually access their savings rather than keeping funds dormant.
Things That Aren’t Confirmed Yet & What To Look Out For
Though the proposal did make the news, it has not been instated. For one, there are a few things to still be clear with:
- How much from the PF balance can be withdrawn (either full or partial) as per the new rule.
- Other restrictions or eligibility criteria tied to it apart from the 10-year contribution minimum.
- How this change weighs on other withdrawal rules or tax implications, or does it affect employer contributions.
Also Read: TDS New Rules From Sept 20: Big Relief for FD Holders