With an aim to ensure social security for workers in old age, the government is planning to put a cap on premature withdrawal of provident fund (PF) money. The Employees' Provident Fund Organisation (EPFO) has proposed that an employee be allowed to withdraw only 75 percent of the overall kitty till the age of 58, instead of 100 percent as allowed under the present Employees' Provident Funds Scheme, 1952, in case of resignation from a job or utilizing it for some other purposes before retirement.
Central Provident Fund Commissioner K K Jalan stated that purpose of this proposal is to retain the worker in the PF net and ensure that the money saved under the PF account as social security for old age is used only in case of dire need and not as a savings bank account. Presently, employees tend to withdraw PF money in their job days or for purposes such as buying house, paying medical bills, children's higher education and weddings.
Currently, of the 13 million annual claims pending with the EPFO, over 6.5 million claims are for 100 percent withdrawal. The proposal by EPFO is presently pending with labour ministry and once it receives approval, it will be implemented by a simple executive order outlining changes in the EPF scheme. If the proposal is implemented, it could bring down the number of claims annually to just 5 million.