The Ministry of Labour and Employment, Government of India, made few amendments to EPF withdrawal process from February 10th, 2016.
The amendments are made to create some introspection to those who used to be frequent withdrawer of EPF. All the member should know about the changes in EPF withdrawal process.The changes are made to make the employee realise the main reason of EPF. This investment is emergency fund; however, primarily meant for long-term retirement accumulation. If you withdraw as and when it is required, then you may end up with less retirement benefits.
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EPF Withdrawal Changes – What Are They?
Following are the major amendments made in EPF withdrawal process:
1) Entire EPF balance Cannot be Withdrawn before attaining the age of 58 years
This is the biggest shock for them who frequently used to change jobs or used to EPF withdrawal. Earlier if you not employed for more than 2 months, then you are allowed to withdraw “Your EPF Contribution+Your Employer EPF Contribution+Interest on both”.
EPFO changed the rules as below from February 16,2016:
“A member who ceases to be in employment and continues to not be employed with a covered establishment for at least two months, may be permitted to withdraw only his own share of contribution, including interest earned thereon. The requirement of ‘two months’ period referred above shall not apply in case of female members resigning from the service for the purpose of getting married or on account of pregnancy/ childbirth.”
So if you are unemployed for more than 2 months or joining a company where EPFO is not provided, then you can withdraw only your part part of EPF and interest on it.
Only exception shall be made for female members resigning for the purpose of marriage or pregnancy or child birth. For the rest of the females there is no change in this rule. They are all treated equally like men. This means for the rest of all EPF members, from now onward not able to withdraw their full EPF amount until they reach the age of 58 Years. This automatically blocks your employer contribution from being withdrawn until your retirement age.
2) Same EPF Account for future employment (even after withdrawal):
Earlier, when you apply for EPF withdrawal, then automatically it consists of employee share, employer share, interest on that and EPS share as per the length of service. After that, such account is treated to be terminated.
As you can see from above first change, you are no longer allowed to withdraw fEPF amount fully. So the account will be live until you reach the age of retirement. Hence, you can use the same account for future jobs. It means you can continue the same EPF account once you join the new company. This automatically transfer the EPF Account.
Also, with new UAN feature you can continue the same old EPF with just quoting your UAN to a new employer.
3) Retirement age increased from the current 55 years to 58 years:
Earlier the retirement age for EPF was 55 years. From now onward, it is increased to 58 years.
4) 90% of EPF Balance Can only be withdrawn once you reach the age of 57 years:
Earlier the retirement age of EPF was 55 years. So one is allowed to withdraw 90% of his or her balance at the age of 54 years. This means one year prior to retirement. Due to increase in age of retirement, it now changed to 57 years.
Hope this answers the most common queries you might have had with regards to Changes in the EPF Withdrawal Rules in 2016.