The Employees’ Provident Fund Organisation (EPFO) has increased the time period for availing premature final settlement during unemployment as well as final settlement from the existing two months to 12 months. The minimum time period for final pension withdrawal has been increased from two months to 36 month. These changes — along with a relaxation in withdrawal norms for education, illness, housing and special circumstances — are expected to come into effect in the next 1-2 months, a government official said on Tuesday. The changes in the minimum period for withdrawal only affect 75 per cent of the PF contribution, as new provisions require members to maintain a minimum of 25 per cent of the contribution at all times. The move is aimed at boosting existing pension corpus levels that tend to get depleted due to complete withdrawals only after two months of unemployment. About 50 per cent of EPF members have less than Rs 20,000 at the time of final settlement, and 75 per cent of pension withdrawals happen within 4 years, the official said. “We have observed that the same person, after 2 months (of unemployment) and after withdrawing the entire PF amount, is again rejoining another company. Effectively, the members are doing a disservice to themselves by withdrawing the entire amount and also not being eligible for a pension,” said the official. “Due to periodic withdrawals of pension funds, members were unable to build a sufficient corpus. Therefore, the 2 months have been extended to 12 months for PF withdrawals in case of unemployment, for the 25 per cent lock-in amount,” the official added. The clarification comes after the EPFO introduced significant changes in the withdrawal conditions for over 30 crore members on Monday. Withdrawals for education have been allowed up to 10 times, and for marriage up to 5 times, compared with the existing limit of 3 partial withdrawals combined for marriage and education. The government has also allowed EPF members to withdraw funds without specifying any reason under a ‘special circumstances’ category. Moreover, the government has approved a reduction in the minimum service period required for withdrawals to 12 months (from 5 years) for housing, 7 years for education and marriage, and any time during service for other withdrawals.
