EPFO may change rules to curb pre-mature withdrawals

Changes will ensure no full payment is made unless the members attain 50 years of age

Retirement fund body EPFO plans to hold about 10% of subscriber money till they turn 50 for discouraging premature withdrawal of entire amount in PF account by members before their superannuation.

During a recent review meeting of Employees' Provident Fund Organisation (EPFO), its Central Provident Fund Commissioner K K Jalan has sought a proposal for discouraging complete withdrawal of provident fund by members before their retirement.

"...Submit a proposal wherein the employees' complete balance should be permitted for final withdrawal only on superannuation or on other special contingencies so identified," revealed minutes of the meeting.

During the meeting held earlier this month, he said that for taking care of other contingencies of members during service history, the facility of part-withdrawal can be revised.

It is being contemplated to change rules to ensure no full payment is made unless the members attain 50 years of age, Jalan said, adding that some discouragement should be brought by retaining some money where members apply for settlement after short spell of service.

"In such (pre-mature withdrawal) cases, only upto 90% of the amount should be released and 10% of the money should be retained to remain with the same Universal (PF) Account Number when he/she comes back again," he said.

The minutes revealed that all the employees' representatives of the EPFO's apex decision making body, the Central Board of Trustees (CBT), are in favour of discouraging pre-mature withdrawals.

It was also felt during the meeting that once UAN system is stabilised, frequent pre-mature withdrawal are likely to reduce in number.

The UAN allows collation of accounts and viewing of updated PF accounts. The UAN remains portable throughout the working careers of members and can be used anywhere in India.

Thus, workers in the organised sector having UAN are not required to apply for a transfer of their PF account claim on changing jobs.