Govt rolls back PF withdrawal norms after massive protests

Unions say government unable to communicate to workers

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Under fire from trade unions, the Employees’ Provident Fund Organisation (EPFO) has rolled back its decision to tighten provident fund (PF) withdrawal norms.

This is the second rollback in EPFO withdrawal norms. Earlier, the government was forced to reverse the Budget proposal to tax 60 per cent of the PF corpus at the time of withdrawal, following widespread protests.

“Considering the representations received from various quarters and after consultations with the various stakeholders, the government has decided to withdraw the February 10 notification with immediate effect,” the labour ministry stated.

Labour Minister Bandaru Dattatreya announced the roll back in Hyderabad on Tuesday, hours after saying the implementation of the new norms was put on hold till July 31.

In February, EPFO had issued a notification saying the employer’s contribution to the PF corpus could be withdrawn only after the employee turns 58 years of age.

According to EPFO rules, 12 per cent of an employee’s salary goes as contribution to PF along with a matching contribution from the employer.

Earlier, subscribers could claim 90 per cent of their PF corpus at 54 years.

Following protests from trade unions, the government also proposed to allow full withdrawal of PF certain grounds such as purchase of a house, serious illness, marriage, and professional education of children. The labour ministry has now referred the matter to the law ministry for clearance.

Now that the February notification has been rolled back, “workers can withdraw the entire amount from the provident fund as per existing provisions of the EPF Scheme, 1952, including the employers’ share of 3.67 per cent”, the labour ministry said.

The labour minister, though, defended the February amendment saying it was done in workers’ interest. “The objective was to provide a minimum social security to the workers at the time of retirement. It was noticed that 80 per cent of the claims settled by EPFO belonged to premature withdrawal of funds, treating the PF accounts as savings accounts, and not a social security instrument.”

“Firstly, it was a decision taken in haste and the government failed to inform the workers accordingly. Today’s (Tuesday’s) decision should have been taken long back avoiding all the unfortunate incidents across the country,” said A K Padmanabhan, president of CITU and member of EPFO’s Central Board of Trustees.