Retirement fund body EPFO today Friday April 01,2016 deferred till April 30 implementation of
new norms that restrict 100 per cent withdrawal of provident fund by
members after unemployment of more than two months, among others.
The EPFO subscribers who are out of job for more than two months can file for full and final settlement of provident fund till month end.
In view of practical difficulties faced in implementation of the notifications, the new provisions will come into effect from May 1, 2016, a circular by the Employees Provident Fund Organisation (EPFO) said.
"Accordingly, all the claims received up to April 30, 2016 are to settled as per the provisions existing prior to the issue of the notification dated February 10, 2016," it added.
Earlier in February, the EPFO amended the EPF Scheme 1952 to tighten the various norms for withdrawal of provident fund including increasing age limit for filing such claims by retiring employees to 58 years from 54 years.
Besides, the retirement fund body also restricted withdrawal of PF to own contribution of subscribers and interest earned on that, if the claimant has remained unemployed for more than two months. The member would be able to withdraw employer's contribution on maturity.
It was stipulated that the requirement of two months' unemployment will not apply in cases of women members resigning from the services for the purpose of getting married, on account of pregnancy or child birth.
According to the new norms, subscribers will not be able to claim withdrawal of PF after attaining 54 years of age. They would have to wait till attaining the age 57 years.
As per the earlier norms, subscribers were allowed to claim 90 per cent of their accumulations in their PF account at the age of 54 years and their claims were settled just one year before their retirement.
The earlier clause was relevant because there were establishments where retirement age was 55 years or 56 years. But this will create a problem in private as well as public sector where people opt for voluntary retirement.
The big change is that now under this facility, the subscriber would be able to withdraw his contribution and interest earned on it unlike 90 per cent of the total accumulations earlier.
In another change, EPFO has made it mandatory to wait till attaining the age of 57 for claiming PF withdrawal for transferring that to the Life Insurance Corporation of India for investment in Varishtha Pension Bima Yojana.
Earlier norms used to allow subscribers to claim 90 per cent of their accumulations for investing in the scheme after attaining the age of 55 years.
All these new provisions related to PF withdrawal would be applicable from May 1, 2016.
Note
1)Limit on PF Withdawals
Existing Rule
The EPF members (employees) can withdraw the full EPF balance after 60 days of unemployment. (The EPF balance consists of employee’s contributions + employer’s contributions + interest amounts. Every month 12% of your “salary” is contributed towards EPF account.)
Employee can withdraw the full PF amount on retirement from service (55 years) or on cessation of employment and not being employed for at least 60 days.
New Rule
The EPF members cannot withdraw full PF amount before attaining the age of retirement. The maximum withdrawal on cessation of employment cannot exceed an amount aggregating employee’s own contribution and interest accrued thereon. You can withdraw your contributions + interest portion only. The employer’s portion can be withdrawn after attaining the retirement age (58 years).
2)Continuity of EPF Membership
Existing Rule
If an employee withdraws full EPF amount after resigning from the job, his/her PF membership is deemed to be terminated. That means he/she is not a member of EPF scheme after the full withdrawal.
New Rule
An employee can only withdraw his share on resigning from the job. You cannot withdraw full EPF amount before attaining the retirement age. So, you will still be the member of EPF even if you cease to be an employee of a EPF covered establishment
3)Retirement Age
Existing Rule
The retirement age is considered as 55 years
New Rule
The age of retirement has now been increased from 55 to 58 years
4)Withdrawal of 90% of EPF Balance
Existing Rule
Employee can withdraw up to 90% of your entire PF balance (employee share + employer share) on attaining 54 years of age or within one year before actual retirement, whichever is later.
New Rule
Employee would now be able to avail this option only on attaining the age of 57 years. The age has now been increased from the current 54 years to 57 years.
The EPFO subscribers who are out of job for more than two months can file for full and final settlement of provident fund till month end.
In view of practical difficulties faced in implementation of the notifications, the new provisions will come into effect from May 1, 2016, a circular by the Employees Provident Fund Organisation (EPFO) said.
"Accordingly, all the claims received up to April 30, 2016 are to settled as per the provisions existing prior to the issue of the notification dated February 10, 2016," it added.
Earlier in February, the EPFO amended the EPF Scheme 1952 to tighten the various norms for withdrawal of provident fund including increasing age limit for filing such claims by retiring employees to 58 years from 54 years.
Besides, the retirement fund body also restricted withdrawal of PF to own contribution of subscribers and interest earned on that, if the claimant has remained unemployed for more than two months. The member would be able to withdraw employer's contribution on maturity.
It was stipulated that the requirement of two months' unemployment will not apply in cases of women members resigning from the services for the purpose of getting married, on account of pregnancy or child birth.
According to the new norms, subscribers will not be able to claim withdrawal of PF after attaining 54 years of age. They would have to wait till attaining the age 57 years.
As per the earlier norms, subscribers were allowed to claim 90 per cent of their accumulations in their PF account at the age of 54 years and their claims were settled just one year before their retirement.
The earlier clause was relevant because there were establishments where retirement age was 55 years or 56 years. But this will create a problem in private as well as public sector where people opt for voluntary retirement.
The big change is that now under this facility, the subscriber would be able to withdraw his contribution and interest earned on it unlike 90 per cent of the total accumulations earlier.
In another change, EPFO has made it mandatory to wait till attaining the age of 57 for claiming PF withdrawal for transferring that to the Life Insurance Corporation of India for investment in Varishtha Pension Bima Yojana.
Earlier norms used to allow subscribers to claim 90 per cent of their accumulations for investing in the scheme after attaining the age of 55 years.
All these new provisions related to PF withdrawal would be applicable from May 1, 2016.
Note
1)Limit on PF Withdawals
Existing Rule
The EPF members (employees) can withdraw the full EPF balance after 60 days of unemployment. (The EPF balance consists of employee’s contributions + employer’s contributions + interest amounts. Every month 12% of your “salary” is contributed towards EPF account.)
New Rule
The EPF members cannot withdraw full PF amount before attaining the age of retirement. The maximum withdrawal on cessation of employment cannot exceed an amount aggregating employee’s own contribution and interest accrued thereon. You can withdraw your contributions + interest portion only. The employer’s portion can be withdrawn after attaining the retirement age (58 years).
2)Continuity of EPF Membership
Existing Rule
If an employee withdraws full EPF amount after resigning from the job, his/her PF membership is deemed to be terminated. That means he/she is not a member of EPF scheme after the full withdrawal.
New Rule
An employee can only withdraw his share on resigning from the job. You cannot withdraw full EPF amount before attaining the retirement age. So, you will still be the member of EPF even if you cease to be an employee of a EPF covered establishment
3)Retirement Age
Existing Rule
The retirement age is considered as 55 years
New Rule
The age of retirement has now been increased from 55 to 58 years
4)Withdrawal of 90% of EPF Balance
Existing Rule
Employee can withdraw up to 90% of your entire PF balance (employee share + employer share) on attaining 54 years of age or within one year before actual retirement, whichever is later.
New Rule
Employee would now be able to avail this option only on attaining the age of 57 years. The age has now been increased from the current 54 years to 57 years.
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