What are the current EPFO pre-retirement withdrawal rules that may change soon?
EPFO officials are working on a proposal to relax the withdrawal rules so that the investors can use their savings for a limited number of purposes such as education, housing and wedding.
EPFO withdrawal rules: While investment in an EPFO (Employees Provident Fund Organisation) account delivers a high rate of return (8.25 per cent per annum), one thing that sometimes puts off investors is the restrictions imposed on corpus withdrawal. For instance, it is not permitted to withdraw the EPFO corpus unless the subscriber reaches 58 years of age or stays jobless for two months or more.
However, the good news is that EPFO officials are reportedly working on a proposal to relax the withdrawal rules so that the investors can use their savings for a limited number of purposes, such as education, housing and weddings. Although there is no fixed timeline, one report by Moneycontrol suggests that the new rule may be introduced within one year.
“We don’t want to put restrictions on the members, it’s their money and they should have the freedom to manage their fund according to their needs,” one official told Moneycontrol, on the condition of anonymity.
Current withdrawal rules
Per the existing rules, withdrawals are allowed for those subscribers who have turned 58 or who have been out of the job market for longer than two months.
Meanwhile, partial withdrawals are allowed under these scenarios
I. For the purchase of a house/flat/construction of a house, including the acquisition of the site. (allowed after five years in service)
II. For alteration/improvement in a house owned by a member/spouse/jointly with spouse (five years from completion of the house).
III. For the refund of the outstanding principal and interest of a loan.
IV. Employees have not received wages for more than two months continuously for reasons other than a strike.
V. For marriage of self/daughter/son/brother/sister (allowed after 7 years in service)
VI. For post-matriculation education of son/daughter (allowed after 7 years in service).
VII. Discharge/dismissal/retrenchment of member challenged in court.
VIII. 90 per cent of the amount is allowed to be withdrawn after 54 years of age and within one year of retirement/superannuation.
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