Home >News >India >Employees withdraw 73,000 cr from retirement fund amid covid

Around 20 million organised sector employees dipped into their retirement corpus and withdrew more than 73,000 crore from the Employees Provident Fund Organization (EPFO) in the nine months ended 31 December, reflecting the hardship the salaried class faced amid the covid-19 crisis in 2020.

In comparison, according to the EPFO annual day report for FY19, the latest official data available in public domain, the retirement fund body had settled 16.37 million claims for the full year worth 81,200 crore. To be sure, it’s however not clear, whether the 2018-19 numbers includes disbursements made by exempted trusts—companies managing their own EPF corpus—or not. If one extrapolates the number of the past nine months, and if the trend continues, then in 2020-21 nearly 26.5 million claims could be settled worth almost 97,700 crore.

Out of the total subscribers, who withdrew money from the retirement corpus in April-December, around 30% were accounted for covid-19 advances, a special window allowing subscribers to withdraw up-to 75% of their savings, or three months’ salary, comprising basic wage plus dearness allowance, whichever was lower.

According to an official aware of the development and official letter reviewed by Mint. while 5.68 million workers took covid-19 advances directly from the EPFO, around 419,762 employees working with companies having EPF exempted trusts withdrew their savings. Put together, 6.1 million subscribers withdrew EPFO savings worth over 18,290 crore in the nine months ended 31 December, according to an official aware of the development.

But, what about the rest? EPFO informed its central board trustees in a letter that the reason for all the 20 million settlements includes “final settlement, death, insurance and advance claims". Though the retirement fund body has not shared the break up other than that of covid-related withdrawals, final settlements happen when either an EPFO subscriber retires or is unemployed for a couple of months, and withdraws the entire savings. “An estimated 21 million salaried employees lost their jobs by the end of August. There were 86 million salaried jobs in India during 2019-20. In August 2020, their count was down to 65 million," Centre for Monitoring Indian Economy had said last September.

While the claim settlement figures indicate EPFO’s readiness to support subscribers, it also reflects the deep financial crisis the salaried class faced due to the pandemic-led job or income losses. Overall, some 19.8 million claims, including covid advances were settled by the EPFO during 1 April-31 December 2020. “Since the introduction of provision for special withdrawal from EPF as a part of PMGKY scheme, the PF officers across the country have settled 56.79 lakh covid-19 advanced claims till 31 December disbursing an amount of 14,310.21 crore to claimants," the EPFO wrote in a letter to CBT members.

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