How Do Recent Changes to EPF Withdrawal Rules and Retirement Age Affect You?

Amendments to the Employees' Provident Fund Scheme, 1952

The Ministry of Labour and Employment, Government of India, has recently made a few amendments to the Employees' Provident Fund Scheme, 1952 (PF Scheme). These guidelines are mainly related to 'early withdrawals' from the Provident Fund and provisions related to PF.

New Rule for EPF Withdrawals

EPF members cannot withdraw the full PF amount before attaining the age of retirement. The maximum withdrawal upon cessation of employment cannot exceed an amount aggregating the employee's own contribution and the interest accrued thereon. This means a separated employee can withdraw their contributions and the interest portion only. The employer's portion can be withdrawn after attaining the retirement age of 58 years.

Continuity of 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. This means he/she is not a member of the EPF scheme after the full withdrawal.

- New Rule: An employee can only withdraw his share upon resigning from the job. A separated employee cannot withdraw the full EPF amount before attaining the retirement age of 58 years. Therefore, a separated employee will still be a member of the EPF even if they cease to be an employee of an EPF-covered establishment.

Retirement Age

- Existing Rule: The retirement age is considered to be 55 years.

- New Rule: The age of retirement has now been increased from 55 to 58 years.

Note: The detailed official notification is attached for your reference.

Regards

I have a query about this amendment. This amendment will be effective from the 10th of February '16. If someone has left their job before this date (suppose the 5th of February '16) and they withdraw their PF after 2 months (suppose the 5th of April '16), then will this amendment be applicable to their withdrawal? Please advise.

Date of Settlement and Contribution Payment

The date of leaving shall be construed as the date of settlement. Therefore, any settlements made after 10th February 2016 will have these provisions applied. Only the member's contribution shall be paid to him, while the employer's contribution will be paid only at the age of 58 years.

Further, TDS, as applicable (Rs. 30,000 as of the date, which is enhanced to Rs. 50,000/- in the current budget), will apply if the amount paid exceeds these limits for service rendered below 5 years.

The budget proposals for 2016-17 and any subsequent amendments are expected to take effect either from the date of notification or from 1.6.2016, whichever comes first. Therefore, we need to await the appropriate notifications to be issued by the government. As a result, the provisions currently in effect for the fiscal year 2015-16 may continue to apply. Please check and confirm.

EPF Amendment and Its Implications

The amendment in the EPF has no relation to Budget 2016. There is a notification from the Labour Ministry stating that until retirement, PF cannot be withdrawn in full. If a member needs an amount after cessation from employment, they must declare that they were not employed in a PF-applicable position during the last two months and can withdraw the member's contribution with interest.

Regarding the retirement age, even if the establishment's policy sets the retirement age at 55 years or earlier, PF cannot be withdrawn until age 58, and 90% withdrawal will only be possible after reaching age 57. Previously, if a member's retirement as per the company was at 55 years or earlier, the member could withdraw 90% of the amount upon reaching age 54.

Therefore, as per the new notification No - GSR 158 (E) on new para 68NNNN, a member's contribution with interest can be withdrawn subject to fulfilling the declaration of two months of non-employment.

Thank you.

Dear Friends,

Greetings. I'm aged 63 years and working in a private college. The PF started in 2014. I want to withdraw 90% of my money. Am I eligible to withdraw? Please guide me through.

Dear Seniors,

If an employee resigns from service before completing 10 years of service, are they eligible to claim Pension Contribution? Please guide me.