Early PF withdrawal won't be easy

Early PF withdrawal won't be easy

NEW DELHI: Withdrawing the provident fund balance each time you switch jobs could soon become a thing of the past if the country's apex retirement fund has its way.

The Employees' Provident Fund Organisation (EPFO) has urged the government to bar workers from pulling out their PF balances on changing jobs.

"Every six months to a year you change your job and withdraw your PF. That makes us more like a bank," said Central PF Commissioner Samirendra Chatterjee.

"The PF account should serve its purpose of social security — having a Rs 15,000 balance at retirement is ridiculous," Chatterjee said. "It's in the larger interest of workers to bar withdrawals," he said.

EPFO's call for change has been spurred by an alarming internal study of this year's PF settlements at PF office in Karnal, Haryana . As many as 89% of the cases settled at the office, which

covers a blend of old and new economy industries, were those of workers withdrawing PF balance after resigning from a job. Just 0.8% workers opted to transfer their PF account to their new job.

The settlement amount for 82% of the workers pulling out their PF was less than Rs 30,000. Nearly 65% workers withdraw their retirement savings before the age of 35. Just 3% EPF members had continuous service of 10 years – a prerequisite to be eligible for pension benefits from EPFO.

The study inferred that 50% of claims are from people withdrawing their PF at the age of 31.33, after working for 2.7 years. They typically take home Rs 10,000, it said. "Sure, people need money, but they shouldn't consume all their savings at every opportunity," said Chatterjee.

Existing PF rules specify that an employee can withdraw his/her entire EPF contributions two months after leaving a job. However, there is a condition that the employee shouldn't start

working elsewhere in that period. If another job is taken up within two months, the EPF balance must be transferred to the worker's new PF account at his/her new workplace.

But these rules are impossible to implement as EPFO has no systems in place to prevent workers from getting new PF accounts with every job switch. Its accounting systems are archaic and operations are still being computerised incrementally.

Source: Economictimes


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