Employer's Share (PF) Withdrawal, now restricted till attaining the age of 58 years.
The Ministry of Labour and Employment, Government of India, has recently made a few amendments in the Employees’ Provident Fund Scheme, 1952 (PF Scheme), vide Notification No. G.S.R. 158(E) Dt. 10th Feb. 2016. These guidelines are mainly related to ‘early withdrawals‘ from Provident Fund & 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Full EPF balance cannot be withdrawn before attaining the Retirement Age.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(1) Full Provident Fund balance cannot be withdrawn (limit on early PF withdrawals)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: 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. Thus an out-going employee can withdraw only his contributions + interest thereon. The employer’s portion (i.e. 3.67%) can be withdrawn after attaining the retirement age (58 years).
However, the withdrawal of other part of Employer share of 8.33% in Pension Fund is not affected and the withdrawal procedure and method remains the same as it was prior to the notification of 10.02.2016. So no need to press the panic buttons by the employees, as only the employer 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 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.
b. New Rule: An employee can only withdraw his share on resigning from the job. Henceforth, he cannot withdraw full EPF amount before attaining the retirement age. So, he will still be the member of EPF even if he cease to be an employee of a EPF covered establishment. And also when such person joins any EPF covered establishment having salary above prescribed limits, still he has to be made the PF member, irrespective of wage ceiling limits and the employer is bound to contribute his share upto the prescribed limit (presently 15000/-) being not an excluded employee. Further, I believe that 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. Employee can withdraw his own contributions + interest thereon alone.
(5) 90% of EPF balance (Paragraph 68 NN amended)
a. Existing rule: Employee can withdraw up to 90% of his 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: 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.
From India, Ahmadabad
34The Ministry of Labour and Employment, Government of India, has recently made a few amendments in the Employees’ Provident Fund Scheme, 1952 (PF Scheme), vide Notification No. G.S.R. 158(E) Dt. 10th Feb. 2016. These guidelines are mainly related to ‘early withdrawals‘ from Provident Fund & 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: 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. Thus an out-going employee can withdraw only his contributions + interest thereon. The employer’s portion (i.e. 3.67%) can be withdrawn after attaining the retirement age (58 years).
However, the withdrawal of other part of Employer share of 8.33% in Pension Fund is not affected and the withdrawal procedure and method remains the same as it was prior to the notification of 10.02.2016. So no need to press the panic buttons by the employees, as only the employer 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 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.
b. New Rule: An employee can only withdraw his share on resigning from the job. Henceforth, he cannot withdraw full EPF amount before attaining the retirement age. So, he will still be the member of EPF even if he cease to be an employee of a EPF covered establishment. And also when such person joins any EPF covered establishment having salary above prescribed limits, still he has to be made the PF member, irrespective of wage ceiling limits and the employer is bound to contribute his share upto the prescribed limit (presently 15000/-) being not an excluded employee. Further, I believe that 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. Employee can withdraw his own contributions + interest thereon alone.
(5) 90% of EPF balance (Paragraph 68 NN amended)
a. Existing rule: Employee can withdraw up to 90% of his 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: 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.
From India, Ahmadabad
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 employees contributions + employers 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 employees own contribution and interest accrued thereon. You can withdraw your contributions + interest portion only. The employers portion can be withdrawn after attaining the retirement age (58 years).
Continuity of your 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. I believe that 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 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 to gain 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 above new rules, kindly note that the withdrawals from the EPF within five years of joining are taxable.
From India, Chennai
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 employees contributions + employers 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 employees own contribution and interest accrued thereon. You can withdraw your contributions + interest portion only. The employers portion can be withdrawn after attaining the retirement age (58 years).
Continuity of your 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. I believe that 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 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 to gain 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 above new rules, kindly note that the withdrawals from the EPF within five years of joining are taxable.
From India, Chennai
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EPF - withdrawal - latest amendmet - Feb'16.pdf