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Centre increases provident fund withdrawal period to 12 months, pension to 36 months
The Union government has increased the period for the final settlement of provident funds to 12 months from two months.
On Monday, the Union Ministry of Labour and Employment announced that members of the Employees' Provident Fund Organisation will now 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.
The decision to amend the scheme was taken by the apex decision-making body of the EPFO, the Central Board of Trustees, headed by Union Labour Minister Mansukh Mandaviya, on Monday.
In a statement after the meeting, the ministry stated that members will be required to maintain 25% of the funds in their provident fund accounts as minimum balance “at all times”.
“This will enable the member to enjoy high rate of interest offered by EPFO (presently 8.25% per annum) along with compounding benefits to accumulate a high-value retirement corpus,” added the ministry.
The new guidelines have attracted criticism, 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.
In a social media post on Wednesday, Trinamool Congress MP Saket Gokhale described the Union government's decision as being “shocking and ridiculous”, as well as “open theft of salaried people's own money”.
“Imagine if a person gets laid off or loses their job,” said Gokhale. “They still have bills and EMIs [equated monthly instalments] to pay. But the [Narendra] Modi government will not allow you to withdraw your own money for a full year.”
He further asked how a salaried person who loses their job will “meet their expenses for a full year when their EPF withdrawal is blocked”.
“It is clear that the Modi government is expecting a drastic rise in unemployment due to its terrible economic policies,” claimed Gokhale. “These new rules locking people's EPF are the signs of a panicked government trying to prevent a run on the EPFO.”
KE Raghunathan, former member of the Central Board of Trustees and Employers' Representative on the Board, described the decision as being “deeply concerning and regressive”, reported The Indian Express.
“This move dilutes the very foundation of social security for India's salaried workforce – especially those living hand-to-mouth,” he told the newspaper.
The Ministry of Labour and Employment 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.
According to Raghunathan, this change risks “leaving millions with negligible retirement savings and no fallback when income ceases”, reported The Indian Express.
“Provident Fund savings are not meant to be treated as recurring deposits for short-term liquidity,” he told the newspaper. “They are structured to provide dignity and financial protection at the end of a worker's career.”
He added that the changes would be like “effectively dismantling the safety net that generations have relied upon”.
Source: Scroll
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Aries: Self-talk is important in love. While singles claim they are not ready or worthy of love, it often comes out. Start being kind internally. Now, if you are in an actual love relationship, the way you treat yourself dictates how your partner treats you; so be fair to yourself
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