Latest EPF Withdrawal Rules: In the recent announcement Employees’ Provident Fund (EPF) has given some key changes regarding the access of funds and also withdrawal options. In the same announcement, they have mentioned that 25% of the contribution should be maintained as a minimum balance in the EPF account. Regarding this, most people are confused. So, let’s understand the new rule and what is 25% minimum balance is in an EPF account.

New EPF Account Rules:

1. There were 13 previously complex rules for partial withdrawals. They have been merged and classified into 3 categories: emergency (illness, education, marriage, home), and needs related to these special circumstances.

2. Under these circumstances employees can withdraw their 100% of the amount which includes employee and employeer share. In the new rule they have mentioned that they are eligible to take 100% of the funds but minimum balance should be maintained for safety purposes which is 25% of your funds. Earlier, there was a facility to withdraw 50% of the employee share for marriage and 6 months salary for illness.

3. Previously, it was possible to withdraw only three times during the service period for marriage and education. Now, it can be withdrawn 10 times for education and 5 times for marriage.

4. The minimum service period for partial withdrawal from the provident fund has been reduced to 12 months. Earlier, there was a provision of 7 years for marriage and 5 years for building a house

5. Previously, members had to clearly state the reasons for withdrawal under special circumstances. Now, in this section, members can apply for withdrawal without having to state any reasons

6. The waiting period for final settlement from EPFO has been increased from 2 months to 12 months, and the waiting period for withdrawal of Pension Fund (EPS) has been increased from 2 months to 36 months.

The 25% EPF Balance Rule that Caused Controversy:

EPFO has fixed a minimum balance of 25 percent of the monthly contributions of the employee and employer in the EPF. Once this minimum amount is deducted, cash can be withdrawn from the remaining 1 percent as per the number of allowed claims. However, the EPFO has clarified this after there was a misconception that this 25 percent balance is locked and will not be allowed to be withdrawn under any circumstances until retirement.

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You can withdraw 15 percent of your cash balance immediately after quitting your job. After that, if you are unemployed for 12 months, you can also withdraw 25 percent of your minimum balance. EPFO has also revealed that even if you retire after the age of 55, retire on partial disability, take voluntary retirement, or leave the country completely, you can withdraw 100 percent of your minimum balance in addition to 25 percent, making it 100 percent, the EPFO said

PF Amount Withdrawal:

EPFO is providing an opportunity to accumulate the required amount without facing financial difficulties in retirement. If the rules have been simplified, if the funds are withdrawn, one will have to face financial difficulties in old age. In EPF, the employee’s share is (12 percent of salary + DA), the employer’s share is 12 percent of the employee’s share, 8.33 percent is EPF contribution (for future pension payment), and the employee deposits the remaining 3.67 percent in the EPF account itself. In addition, VPF can be made. Currently, the interest rate on EPF is 8.25 percent. The interest is compounded annually. This results in income in the form of compound interest. There are no income tax problems on the amount received If all these are added together, the return is about 9.5-10 percent. Therefore, EPFO is the right choice for those who want to accumulate a good fund in the long term. Therefore, if you withdraw it now and then just because the rules have been simplified, there is no point in having the fund.

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