Now, you can draw easily from GPF for education, housing. But should you?

Touch your pension fund only in case of dire need, not to fund consumption expenditure

The central government has amended the provisions of the General Provident Fund (Central Service) Rules, 1960, to make it easier for employees to withdraw from their GPF. Changes have been brought about in the following categories: education, obligatory expenses, illnesses and purchase of consumer durables.

Earlier, while government employees could withdraw from the GPF only for higher education, the rules have now been eased to allow withdrawals for primary, secondary and higher education for all streams and institutions.

Earlier, an employee could withdraw three months' pay or half the amount of credit, whichever was less. This limit has now been hiked to 12 months' pay or three-fourth of the credit amount, whichever is less. Earlier, an employee became eligible for withdrawal after 15 years of service. This requirement has now been reduced to 10 years.

Rules have also been eased in the category of withdrawal related to housing, housing loan repayment, purchase of house site, house renovation, etc. The permissible withdrawal of up to 90 per cent of the balance at credit has been delinked from the limits prescribed under the HBA (house building advance) Rules. This facility can now be availed by a subscriber any time during his service. The earlier rules said that if a person sold the house for which GPF withdrawal had been availed, he had to deposit the money back. This requirement has now been removed.

Rules have also been amended in the case of withdrawal for the purchase of car, motorcycle, scooter; repayment of loan for such purchases; extensive repair of car; and making of deposit to book a car. Now, withdrawal can be made up to three-fourth of the credit amount or cost of the vehicle, whichever is less. The service duration eligibility limit has been brought down to 10 years.

Withdrawal of up to 90 per cent of the balance without assigning a reason was earlier allowed to subscribers due for retirement within a year. This condition has now been relaxed to two years before retirement.

Administrative procedures for withdrawal have also been simplified. Earlier, an employee had to submit documentary proof of the reason for withdrawal. Now, he only has to fill a declaration form explaining the reason for withdrawal. The head of department has now been given the power to sanction the withdrawal by employees under him. Rules have also been amended so that the amount can be sanctioned and paid out within 15 days.

The notification for these amendments has come from the Department of Pension and Pensioners' Welfare, Ministry of Personnel, PG and Pensions, Government of India.

Financial advisors, however, suggest that employees should avoid touching their retirement corpus as far as possible. "Use other existing savings and loan sources instead of dipping into your retirement corpus," says Manoj Nagpal, chief executive officer, Outlook Asia Capital. Deepesh Raghaw, founder, PersonalFinancePlan.in, a Sebi-registered investment advisor (RIA), said: "Now that the rules have been eased, people who are not money savvy could end up severely depleting their retirement corpus. So, withdraw only for very essential purposes, such as an illness, or to purchase assets whose value will appreciate in the future."