New data backs low EPF rates

The EPFO data also shows the scheme is failing to build up assets for retirement 8212; it8217;s mandatory for people with incomes up to Rs 6,500 per month.

Final settlements by 90 per cent of members are taken while resigning from jobs. Only 10 per cent of the withdrawals are for superannuation.

The objective of the EPFO scheme is to encourage build up in savings for old age. That is why the scheme has tax benefits. Yet, the data on withdrawals shows that this is not what is happening, especially among those who are mandatorily members of EPF.

The ones who retain and build up balances are those who join voluntarily. The top 7 per cent of the members, in the bracket of Rs 50,000 to Rs 50 lakh, have an average EPF balance of Rs 88,729 per member.

Obviously, lax withdrawal rules are to blame. According to the EPFO, the bulk of the members withdraw their money while in employment.

The EPFO also ruled out differential rates of return for categories of members, as reported in sections of the media.