Employer's Share (PF) Withdrawal Now Restricted Until Age 58
The Ministry of Labour and Employment, Government of India, has recently made amendments to the Employees’ Provident Fund Scheme, 1952 (PF Scheme), as per Notification No. G.S.R. 158(E) dated 10th February 2016. These guidelines mainly relate to ‘early withdrawals’ from the Provident Fund and provisions related to PF withdrawals. These latest EPF withdrawal rules are effective from 10th February 2016.
Amendments are related to:
Full EPF balance cannot be withdrawn before attaining the retirement age. Let’s see in detail about these new PF withdrawal rules.
1. Full Provident Fund Balance Cannot Be Withdrawn (Limit on Early PF Withdrawals)
(Inserted Paragraph 68 NNNN: Option for Withdrawal on Cessation of Employment)
Existing rule: EPF members (employees) can withdraw the full EPF balance after 60 days of unemployment. (The EPF balance consists of the employee’s contributions, employer’s contributions, and interest amounts. Every month, 12% of your “salary” is contributed towards the EPF account.)
New rule: EPF members cannot withdraw the full PF amount before attaining the age of retirement. The maximum withdrawal on cessation of employment cannot exceed an amount aggregating the employee’s own contribution and interest accrued thereon. Thus, an outgoing employee can withdraw only his contributions and interest thereon. The employer’s portion (i.e., 3.67%) can be withdrawn after attaining the retirement age (58 years).
However, the withdrawal of the other part of the employer's share of 8.33% in the Pension Fund is not affected, and the withdrawal procedure and method remain the same as they were prior to the notification of 10.02.2016. So, no need to press the panic buttons by the employees, as only the employer's share of 3.67% is being retained with the EPF Organisation.
2. Continuity of EPF Membership
(Explanation to Para 26-A omitted and Para 69(2) & (5) also deleted)
a. Existing rule: If an employee withdraws the 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 the EPF scheme after the full withdrawal.
b. New rule: An employee can only withdraw his share on resigning from the job. Henceforth, he cannot withdraw the full EPF amount before attaining the retirement age. So, he will still be a member of the EPF even if he ceases to be an employee of an EPF-covered establishment. Also, when such a person joins any EPF-covered establishment having a salary above prescribed limits, he still has to be made a PF member, irrespective of wage ceiling limits, and the employer is bound to contribute his share up to the prescribed limit (presently 15,000/-), being not an excluded employee. Further, I believe that the concept of ‘In-operative EPF a/c’ may cease to exist.
3. Retirement Age (Para 69 Amended)
a. Existing rule: The retirement age is considered as 55 years.
b. New rule: The age of retirement has now been increased from 55 to 58 years.
4. EPF Withdrawal Provisions
a. Existing rule: An 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.
b. New rule: As discussed above, the retirement age has now been increased from 55 to 58 years, and the option of full EPF withdrawal on resignation will not be allowed. Employees can withdraw their own contributions and interest thereon alone.
5. 90% of EPF Balance (Paragraph 68 NN Amended)
a. Existing rule: Employees can withdraw up to 90% of their entire PF balance (employee share + employer share) on attaining 54 years of age or within one year before actual retirement, whichever is later.
b. New rule: Employees would now be able to avail themselves of this option only on attaining the age of 57 years. The age has now been increased from the current 54 years to 57 years.
From India, Ahmadabad
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34The Ministry of Labour and Employment, Government of India, has recently made amendments to the Employees’ Provident Fund Scheme, 1952 (PF Scheme), as per Notification No. G.S.R. 158(E) dated 10th February 2016. These guidelines mainly relate to ‘early withdrawals’ from the Provident Fund and provisions related to PF withdrawals. These latest EPF withdrawal rules are effective from 10th February 2016.
Amendments are related to:
Full EPF balance cannot be withdrawn before attaining the retirement age. Let’s see in detail about these new PF withdrawal rules.
1. Full Provident Fund Balance Cannot Be Withdrawn (Limit on Early PF Withdrawals)
(Inserted Paragraph 68 NNNN: Option for Withdrawal on Cessation of Employment)
Existing rule: EPF members (employees) can withdraw the full EPF balance after 60 days of unemployment. (The EPF balance consists of the employee’s contributions, employer’s contributions, and interest amounts. Every month, 12% of your “salary” is contributed towards the EPF account.)
New rule: EPF members cannot withdraw the full PF amount before attaining the age of retirement. The maximum withdrawal on cessation of employment cannot exceed an amount aggregating the employee’s own contribution and interest accrued thereon. Thus, an outgoing employee can withdraw only his contributions and interest thereon. The employer’s portion (i.e., 3.67%) can be withdrawn after attaining the retirement age (58 years).
However, the withdrawal of the other part of the employer's share of 8.33% in the Pension Fund is not affected, and the withdrawal procedure and method remain the same as they were prior to the notification of 10.02.2016. So, no need to press the panic buttons by the employees, as only the employer's share of 3.67% is being retained with the EPF Organisation.
2. Continuity of EPF Membership
(Explanation to Para 26-A omitted and Para 69(2) & (5) also deleted)
a. Existing rule: If an employee withdraws the 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 the EPF scheme after the full withdrawal.
b. New rule: An employee can only withdraw his share on resigning from the job. Henceforth, he cannot withdraw the full EPF amount before attaining the retirement age. So, he will still be a member of the EPF even if he ceases to be an employee of an EPF-covered establishment. Also, when such a person joins any EPF-covered establishment having a salary above prescribed limits, he still has to be made a PF member, irrespective of wage ceiling limits, and the employer is bound to contribute his share up to the prescribed limit (presently 15,000/-), being not an excluded employee. Further, I believe that the concept of ‘In-operative EPF a/c’ may cease to exist.
3. Retirement Age (Para 69 Amended)
a. Existing rule: The retirement age is considered as 55 years.
b. New rule: The age of retirement has now been increased from 55 to 58 years.
4. EPF Withdrawal Provisions
a. Existing rule: An 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.
b. New rule: As discussed above, the retirement age has now been increased from 55 to 58 years, and the option of full EPF withdrawal on resignation will not be allowed. Employees can withdraw their own contributions and interest thereon alone.
5. 90% of EPF Balance (Paragraph 68 NN Amended)
a. Existing rule: Employees can withdraw up to 90% of their entire PF balance (employee share + employer share) on attaining 54 years of age or within one year before actual retirement, whichever is later.
b. New rule: Employees would now be able to avail themselves of this option only on attaining the age of 57 years. The age has now been increased from the current 54 years to 57 years.
From India, Ahmadabad
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About These New PF Withdrawal Rules
Full EPF Balance Cannot Be Withdrawn (Limit on Early PF Withdrawals)
Existing rule: The EPF members (employees) can withdraw the full EPF balance after 60 days of unemployment. (The EPF balance consists of the employee's contributions + employer's contributions + interest amounts. Every month, 12% of your "salary" is contributed towards the EPF account.)
New Rule: The EPF members cannot withdraw the full PF amount before attaining the age of retirement. The maximum withdrawal on cessation of employment cannot exceed an amount aggregating the 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).
Continuity of Your EPF Membership
Existing rule: If an employee withdraws the 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 the EPF scheme after the full withdrawal.
New Rule: An employee can only withdraw his share on resigning from the job. You cannot withdraw the full EPF amount before attaining the retirement age. So, you will still be a member of the EPF even if you cease to be an employee of an EPF-covered establishment. I believe that the concept of 'In-operative EPF a/c' may cease to exist.
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.
EPF Withdrawal Provisions
Existing rule: You (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: As discussed above, the retirement age has now been increased from 55 to 58 years, and the option of full EPF withdrawal on resignation will not be allowed. You can withdraw your contributions + interest portion only.
90% of EPF Balance
Existing rule: You 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: You would now be able to avail of this option only on attaining the age of 57 years. The age has now been increased from the current 54 years to 57 years.
Your EPF contributions/savings are meant for your retirement. Dipping into the corpus before you retire prevents your money from gaining from the power of compounding.
These new rules may FORCE you to accumulate a portion of your PF fund till you attain the retirement age. Besides the above new rules, kindly note that withdrawals from the EPF within five years of joining are taxable.
From India, Chennai
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Full EPF Balance Cannot Be Withdrawn (Limit on Early PF Withdrawals)
Existing rule: The EPF members (employees) can withdraw the full EPF balance after 60 days of unemployment. (The EPF balance consists of the employee's contributions + employer's contributions + interest amounts. Every month, 12% of your "salary" is contributed towards the EPF account.)
New Rule: The EPF members cannot withdraw the full PF amount before attaining the age of retirement. The maximum withdrawal on cessation of employment cannot exceed an amount aggregating the 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).
Continuity of Your EPF Membership
Existing rule: If an employee withdraws the 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 the EPF scheme after the full withdrawal.
New Rule: An employee can only withdraw his share on resigning from the job. You cannot withdraw the full EPF amount before attaining the retirement age. So, you will still be a member of the EPF even if you cease to be an employee of an EPF-covered establishment. I believe that the concept of 'In-operative EPF a/c' may cease to exist.
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.
EPF Withdrawal Provisions
Existing rule: You (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: As discussed above, the retirement age has now been increased from 55 to 58 years, and the option of full EPF withdrawal on resignation will not be allowed. You can withdraw your contributions + interest portion only.
90% of EPF Balance
Existing rule: You 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: You would now be able to avail of this option only on attaining the age of 57 years. The age has now been increased from the current 54 years to 57 years.
Your EPF contributions/savings are meant for your retirement. Dipping into the corpus before you retire prevents your money from gaining from the power of compounding.
These new rules may FORCE you to accumulate a portion of your PF fund till you attain the retirement age. Besides the above new rules, kindly note that withdrawals from the EPF within five years of joining are taxable.
From India, Chennai
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PF WITHDRAWAL RULES.zip
Amendments-in-P aragraph-72-6-o f-EPF-Scheme-19 52.pdf