The news: The Central Board of Trustees (CBT), the apex decision-making body of EPFO, headed by Labour Minister Mansukh Mandaviya, has made several changes to the rules of EPF withdrawals. These changes are summarised in the image below.
Source: Media, X.com
Analysis
Major changes
- The partial withdrawal rules of the EPF Scheme has been categorised into three types:1
- Essential Needs (illness, education, marriage)
- Housing Needs
- Special Circumstances
- Minimum balance after partial withdrawal should be 25% of the corpus. Upto 75% of the PF can be withdrawn in partial withdrawal.
- Minimum duration of service or membership for withdrawal is 12 months.
- If someone loses their job, then 75% of the amount can be withdrawn immediately, and after one year, the facility to withdraw the entire amount will be available.
- Number of partial withdrawals for Education and marriage increased from previous 3 withdrawals to 10 times and 5 times respectively.
Were these changes required?
- These changes in rules of partial withdrawal does simplify the process of withdrawal from EPF account in certain circumstances like marriage, education, etc.
- But it restricts the account holder from withdrawing 25% of the funds from his own account.
- It also delays the complete settlement of funds after job loss or retirement.
- From employees’ point of view, the simplification is welcome but the limitation in the amount which can be partially withdrawn and the delay in complete settlement after retirement is definitely not going to benefit him in any way.
Why these changes were made?
- As per the minister,
- The idea behind retaining 25% amount for a year is that the 10-year service tenure is not disrupted.
- Receiving a pension will ensure their social and economic security
- But what appears to be happening is that the government wants more money in the EPF account to be present all the time, so that they can be utilised elsewhere.
- Also, the requirement of mandatory 25% minimum balance gives EPFO the opportunity to invest or use the funds elsewhere without worrying about withdrawal by the account holder.
- As per EPFO officials, the EPFO subscribers should get the benefit of interest credited to accumulated corpus every year, and thus the time period for full withdrawal has been increased from 2 months to 12 months.
What is being said in the media?
- Many news agencies are praising the step using the same words (simplified, 100% withdrawal, etc.)
- On X.com there are posts in favour of the rules supporting the ease of withdrawal and 100% withdrawal.
- Opposition, many individuals, organisations are criticizing it, calling it a cruel blow to the striving service class, especially those unemployed, terminated, or nearing retirement.
Critical questions
- Were these changes in rules required for the benefit of the contributors or for the benefit of the government?
- Is government benefitting from changes in EPF withdrawal rules?
- Do people have a choice to opt out of this scheme?
- Was any survey conducted or were any recommendations made by competent agencies in this regard or is this purely a decision of the government?
Opinion
- The employees now have lesser control over their own PF account and money.
- First taxation of EPFO money was started. Now withdrawal of your own money has been restricted.
- The current government disregards the core principle of democracy – government’s purpose is to serve the citizens, who are the ultimate source of its power.
Critic-lens 
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